Energy Market Update - 07 February 2025
Energy markets showed a mixed trend today, with natural gas prices continuing their upward movement due to colder temperatures and strong demand, while power prices softened slightly amid shifting supply dynamics. Geopolitical factors, including LNG trade flows and storage levels, continue to play a key role in market sentiment.
UK natural gas prices edged higher, with the NBP day-ahead contract at 135.65p/therm and the front-month contract at 133.19p/therm. The Dutch TTF front-month contract settled at €54.00/MWh, down slightly from the previous day. Market sentiment remains bullish as colder-than-average temperatures persist across Northwest Europe, increasing heating demand and storage withdrawals. European gas storage levels stand at 50.63% of capacity, slightly above the target set for the start of February. LNG arrivals remain strong, with 10 cargoes expected at UK terminals in the coming weeks. Meanwhile, US LNG shipments to Europe continue to rise as exporters bypass China due to recently imposed tariffs on US LNG imports.
Power prices eased slightly, with the UK day-ahead baseload settling at £111.99/MWh, down from £118.86/MWh in the previous session. The front-month contract rose to £108.85/MWh, tracking the gas market’s gains. France’s nuclear output has declined to its lowest level this year, increasing the likelihood of greater reliance on gas-fired generation. Wind generation is expected to fall in the coming days, which could push prices higher in the short term. However, forecasts indicate a more stable wind output across Northwest Europe towards the end of February. The UK government has announced plans to reform planning rules for small modular nuclear reactors, which could impact long-term power market fundamentals.
In broader commodity markets, Brent crude oil settled at $74.29/bbl, reflecting concerns over global demand amid potential trade tensions between the US and China. However, oil prices found some support as the US imposed sanctions on Iran’s crude exports. Meanwhile, coal prices edged higher to $115.86/tonne, and EU carbon prices held firm at €81.93/tonne, supporting power market stability.
Markets remain volatile, with traders closely monitoring temperature trends, storage levels, and geopolitical risks. While colder weather continues to drive gas demand, strong LNG supply and steady European storage levels may provide some relief in the weeks ahead.