Energy Market Update - 09 January 2025
The energy markets trended downward yesterday, driven by milder weather forecasts for late January and robust LNG supply, despite near-term cold and renewable generation shortfalls.
European natural gas prices declined across the curve due to strong LNG imports and forecasts of temperatures rising above seasonal averages by next week. The UK NBP spot fell to 117.00 p/therm, while the TTF Front Month dropped to €45/MWh. These declines occurred despite increased demand from colder-than-normal weather, which pushed UK withdrawals from medium-range storage to 72 mcm yesterday. EU gas storage levels remain at 69%, reflecting ongoing withdrawals as winter progresses.
Electricity markets followed similar trends, with curve prices softening due to bearish weather forecasts and weaker carbon prices. UK power prices saw day-ahead levels rise to £106.72/MWh due to low wind output and tight margins during peak demand. The National Grid ESO issued a margin notice, later withdrawn, amidst tight system conditions caused by calm weather and interconnector outages, including Eleclink and Viking Link. Renewable generation remains constrained but is expected to recover by the weekend.
The outlook for both gas and power remains stable in the short term, with LNG inflows continuing to provide significant supply security. However, interconnector issues and subdued wind generation may maintain pressure on prompt prices. Brent crude traded at $76.16/bbl, while EU carbon allowances fell to €72/tonne, reflecting broader bearish sentiment across energy markets.