Energy Market Update - 13 February 2025
Energy markets declined further today, with gas prices easing on forecasts of warmer weather and strong LNG arrivals, while power prices followed lower. Geopolitical developments, including potential Ukraine peace talks, influenced market sentiment.
Reports indicate that Presidents Trump and Putin have initiated discussions aimed at resolving the conflict, though Ukraine and European leaders have yet to be directly involved. This has created some uncertainty, with markets watching closely for any concrete developments that could impact energy security and supply routes.
UK and European gas prices extended losses as mild weather forecasts reduced demand expectations. The NBP front-month contract settled at 134.99p/therm, down from 140.57p/therm, while the TTF front-month contract dropped to €55.66/MWh, falling from €57.77/MWh. The decline was driven by rising LNG arrivals, with eight cargoes expected in the UK over the next month. European storage levels stood at 47.24%, slightly lower than the previous day but still providing some supply security.
Norwegian gas flows were stable at 319 mcm/day, despite unplanned outages at the Kristin and Troll fields. Meanwhile, European policymakers are discussing adjustments to gas storage targets, as weak summer-winter spreads have reduced incentives for injections. A group of market participants has urged the European Commission to avoid reintroducing a gas price cap under its Clean Industry Deal, warning that it could disrupt LNG flows and market efficiency.
UK power prices declined in line with weaker gas markets. The UK day-ahead baseload price settled at £129.50/MWh, while the front-month baseload contract fell to £110/MWh, down from £114/MWh. The broader European power market also softened, with lower gas prices and strong renewable generation keeping prices in check. French nuclear output rebounded to 49 GW, up from 45 GW, as more units returned from maintenance, adding downward pressure on prices.
Wind forecasts for the coming days indicate increased generation, particularly from 21 February, which could further weigh on short-term prices. In addition, the European carbon market saw a decline, with EUAs falling to €80.29/tonne, down from €83/tonne, as increased wind generation expectations reduced emissions demand.
Brent crude prices continued their downward trend, trading at $75.18/bbl, down from $77/bbl. This decline follows reports of potential Ukraine-Russia peace negotiations, raising hopes of easing supply risks. Additionally, Norway’s oil sector is expected to maintain high investment levels, ensuring steady production. Coal prices remained relatively stable, with API2 coal for 2026 trading at $114/tonne.
Elsewhere, Henry Hub gas prices edged up to $3.57/MMBtu, while Asian JKM LNG prices hovered around $14.92/MMBtu. Global energy demand remains uncertain, with industrial activity showing mixed signals amid concerns about economic slowdown in key markets.
Market sentiment remains cautious, with traders closely monitoring geopolitical negotiations, European storage policy decisions, and evolving weather conditions. Warmer temperatures and strong LNG supplies are expected to keep prices under pressure in the near term, though any unexpected disruption to supply routes or policy shifts could alter the market outlook.