Energy Market Update - 10 January 2025
The energy market experienced further downward movement in gas and power prices, driven by mild weather, robust LNG imports, and healthy storage levels across Europe.
Natural gas markets continued to see declines, with the NBP spot price falling to 116.00 p/therm and the TTF spot settling at €45.89/MWh. Milder temperatures and steady Norwegian supplies have reduced demand, while European gas storage levels remain at 68% capacity. Despite maintenance at the Kollsnes plant and the Hammerfest LNG facility, Norwegian gas flows increased to 332 mcm/day. However, colder-than-average weather persists in parts of Germany and France, temporarily supporting near-term contracts. LNG arrivals to the UK and the continent have ramped up, helping to offset storage withdrawals.
In power markets, prices mirrored the gas trend, with the UK base spot dropping to £106.32/MWh. The German Baseload front month contract also opened lower, down €4.00/MWh. Low wind generation continued to tighten short-term supply, necessitating the use of more expensive thermal generation. The UK’s Viking Link returned to full capacity, increasing imports from Denmark, while declining coal and EUA prices added to the bearish sentiment. However, sustained cold and weak renewable generation supported near-term prices.
Broader energy commodities also trended downward. Brent crude edged slightly higher to $76.92/bbl but remains subdued due to concerns over global demand. Coal prices dipped to $106.58/tonne, while carbon allowances (EUAs) fell marginally to €73.46/tonne. Asian LNG prices remained soft, reflecting weak demand in the region. The JKM benchmark settled at $13.52/MMBtu, its lowest since mid-December.
Looking ahead, a return to seasonal temperatures next week is expected to stabilise demand. LNG deliveries to Europe remain strong, with several cargoes due to arrive in the UK in the coming weeks. While market fundamentals suggest continued pressure on prices, the potential for further cold spells could maintain some support for short-term contracts.