Energy Market Update - 17 January 2025
European gas and power markets softened yesterday as milder weather forecasts, healthy LNG supply, and steady Norwegian flows added bearish sentiment. Spot contracts on the NBP closed lower at 118.80p/therm, while TTF settled at €46.83/MWh.
Milder weather in Southern Europe and a revised forecast suggesting warmer conditions from 20 January to early February have eased short-term demand pressures. Despite this, the UK gas system opened 13mcm/day short this morning due to strong gas-for-power demand, with Norwegian flows steady but slightly below recent levels at 324mcm/day. An unplanned outage at the Njord gas field has been extended until 20 January. LNG supply remains robust, with seven cargoes expected to reach the UK in the coming weeks, supporting system balance. European gas storage levels stand at 63.3%, with withdrawal rates increasing in recent days.
Power markets followed the gas trend, with UK day-ahead baseload power falling to £106.10/MWh. France was an outlier, with day-ahead prices rising to €142.84/MWh due to cooler temperatures. Wind generation is forecast to increase later this week, reducing reliance on gas-fired power generation. UK wind output is expected to exceed seasonal averages, potentially reaching 12.8GW over the next two weeks. Planned outages at UK nuclear plants and a temporary shutdown of the UK-France interconnector in February could reduce domestic power capacity.
Geopolitical factors remain a key focus, with NATO increasing monitoring in the Baltic Sea following recent energy infrastructure incidents. Risks of further disruptions, as well as ongoing supply uncertainties from Russia, continue to influence market sentiment. Brent crude prices remained steady at $81.29/bbl as markets await signals from the incoming US administration, which may pursue further energy sanctions or domestic drilling policies. Carbon prices edged higher, with EUA December 2025 contracts closing at €78.33/tonne.
Looking ahead, the anticipated rise in wind generation and warmer temperatures could further soften gas and power prices. However, unplanned outages and any changes in LNG flows or geopolitical developments could provide upside risk.