Energy Market Update - 12 March 2025
Energy markets experienced significant volatility yesterday, with gas prices surging 5% before retreating slightly after market close on news of a potential 30-day ceasefire agreement between Ukraine and Russia. Uncertainty over the final terms of the agreement kept markets cautious, while colder-than-normal weather forecasts continued to support demand.
European natural gas prices saw strong gains during the session, driven by geopolitical uncertainty and expectations of increased heating demand due to below-average temperatures. Comments from the European Commission indicated that a lasting peace deal remains difficult, which initially fuelled bullish sentiment. The TTF front-month contract settled at €42.71/MWh, up from €41.23, while the NBP equivalent closed at 105.32p/therm, up from 100.81p.
Despite the late-session rally, morning trading has seen some retracement, with TTF opening at €42/MWh, down €1. Norwegian gas flows remained stable at 321 mcm/day, despite an unplanned outage at the Åsgard field. European gas storage levels stood at 35.88%, slightly lower than the previous day. Meanwhile, LNG supply to the UK remained strong, with ten cargoes expected over the next two weeks, up from eight previously.
UK power prices followed the gas market higher, supported by low wind generation and colder temperatures. The UK baseload front-month contract closed at £86/MWh, up from £83, while the front-season contract rose to £84/MWh from £80. Spot prices also firmed, with UK day-ahead baseload rising to £96.10/MWh. Wind power generation is expected to remain below seasonal norms for the coming days, exacerbating reliance on thermal generation.
Elsewhere in the energy complex, Brent crude edged higher to $70/bbl, up from $69, as markets assessed the impact of potential trade tariffs introduced by the US. European carbon prices softened, with EUA December 2025 contracts falling to €68 from €69. Henry Hub gas prices remained stable at $4.45/MMBtu, while JKM LNG was assessed at $13.69/MMBtu, broadly unchanged from the previous session.