Energy Market Update - 14 January 2025
Natural gas and power prices rose yesterday due to geopolitical tensions, colder weather forecasts, reduced renewable generation, and supply disruptions from Norwegian gas fields.
Natural gas prices surged after reports of an attempted attack on the Turkstream pipeline, which transports gas from Russia to Turkey, though operations were unaffected. Ukraine dismissed the reports as Russian propaganda. Day-ahead gas (NBP) settled at 123.03p/therm, while near-curve contracts rallied amid colder-than-average weather forecasts, reduced wind and solar output, and an unplanned outage at Norway’s Njord field, which cut flows by 5.3mcm/day. Norwegian exports to the continent remained robust at 337.9mcm/day but later dropped to 330mcm/day this morning due to an additional outage at the Visund field. UK system balance opened 7mcm/day oversupplied, with ten LNG cargoes expected to arrive in the next 12 days, including one today at South Hook.
UK power prices also strengthened, supported by gains in the gas market. Day-ahead baseload power settled at £115.49/MWh, driven by reduced wind generation and lower renewable output. UK wind speeds are forecast to remain below seasonal norms until 23 January, increasing reliance on gas-fired power generation. Nuclear generation stood at 4.9GW, with reactors at Heysham and Hartlepool set to return by the end of the month. Imports from France have risen, with UK net power imports reaching 4.6GW, the highest level since August. French nuclear output briefly exceeded 55GW yesterday, though it later fell to 53.5GW following a trip at the Civaux-1 reactor.
Broader market influences include US sanctions on Russian oil and gas assets, which have complicated LNG cargo destinations. EU gas storage levels have fallen to 65.85% following recent cold weather, compared to higher levels seen in previous years. The EU is also deliberating further sanctions on Russian gas in response to ongoing geopolitical tensions. Brent crude settled at $81.01/bbl, while EUA carbon prices edged higher to €76.92/tonne, reflecting sustained concerns over supply constraints and colder weather.