Energy Market Update - 13 March 2025
Energy markets moved slightly higher this morning following yesterday’s softening of gas prices driven by optimism surrounding a potential ceasefire in Ukraine. The European Commission’s plans for a coordinated gas purchasing platform also contributed to improved sentiment. Meanwhile, oil prices edged up after a 2% jump in the previous session, supported by lower-than-expected US inflation figures.
Natural gas prices experienced some volatility, with the NBP front-month contract settling at 104.19p/therm yesterday, down from 105.32p. The TTF front-month closed at €42.25/MWh, a slight decline from €42.71. Market participants are closely watching developments in peace negotiations, with Ukraine’s willingness to accept a 30-day ceasefire seen as a step toward potential conflict de-escalation. However, Russia’s conditions—including Ukraine renouncing NATO membership and recognising Russian control over Crimea and four Ukrainian provinces—remain significant hurdles.
Despite this, the broader gas market expects potential shifts in LNG trade flows, particularly if neutral regions like Southern Asia increase Russian imports, easing pressure on US and Middle Eastern suppliers. On the supply side, Norwegian gas flows to the UK increased to 332 mcm/day following the conclusion of maintenance at key production fields. UK LNG sendout remained stable at 67 mcm/day, with 10 LNG vessels expected over the next two weeks.
UK power prices saw mixed movements, with the UK front-month baseload contract at £85/MWh, slightly down from £86, while the front-season contract dropped to £81/MWh from £84. Wind generation in the UK has been below seasonal norms, leading to increased gas-fired power generation, which currently accounts for 48% of the UK’s electricity mix. Colder temperatures have also pushed demand higher, with total UK gas demand at 289 mcm today, exceeding seasonal averages by 23 mcm. Forecasts indicate wind speeds will remain subdued until late next week, which could sustain higher gas burn for power generation.
In the broader commodity space, Brent crude rose to $71.00/bbl after a strong rally yesterday, driven by a drawdown in US crude inventories. European carbon prices also edged higher, with EUA December 2025 contracts trading at €70, up from €68. Meanwhile, Henry Hub natural gas prices softened to $4.08/MMBtu from $4.45, and Asian LNG prices held steady at $13.69/MMBtu. European coal prices continued their gradual decline, with the ARA CIF Cal-26 contract at $101.12/tonne.
The market remains focused on geopolitical developments, LNG trade dynamics, and European gas storage strategies as it navigates near-term price drivers.