Energy Market Update - 13 January 2025
Energy markets saw an upward movement today, driven by colder weather forecasts, weaker wind generation, and heightened geopolitical tensions, which increased pressure on both gas and power prices.
European natural gas prices rose across key hubs, with the NBP spot price reaching 114.50 p/therm and TTF spot at €45.89/MWh. The NBP February-25 front month contract approached 120 p/therm, reflecting expectations of increased demand due to colder weather and reduced wind output. Forecasts indicate temperatures returning to seasonal norms, with France remaining below average. Wind generation forecasts for Germany, Benelux, and the UK have been downgraded by approximately 20 GW since Friday, leading to increased reliance on gas-fired power generation. This has coincided with reports of a potential impact on the Turkstream pipeline following alleged Ukrainian strikes, further raising supply concerns.
UK electricity prices were similarly impacted by the reduced wind generation and cold weather. The UK spot base price fell slightly to £106.32/MWh, while German and French baseload contracts for February-25 reached €101.81/MWh and €106.69/MWh, respectively. Ongoing outages at Heysham and Hartlepool nuclear plants, representing 1.175 GW of capacity, have tightened supply. Despite this, the UK expects the arrival of seven LNG cargoes in the coming weeks, which could help ease supply pressures.
Broader market factors also influenced prices. Brent crude oil climbed to $80 per barrel, its highest level since September, as new US sanctions targeting Russian oil and LNG raised concerns of tighter global supply. Additionally, EU gas storage levels remain low at 66%, significantly below averages from previous years, with Centrica highlighting the risks posed by depleted reserves. Carbon prices remained steady at €74.85/tonne as the market continued to adapt to coal-to-gas switching dynamics.