Energy Market Update - 18 February 2025
Energy markets continued their downward trajectory, with natural gas and power prices falling amid mild weather, strong LNG arrivals, and ongoing geopolitical uncertainty surrounding the US-Russia peace talks in Saudi Arabia. Expectations of a potential deal weighed on market sentiment, while European gas storage remained under pressure.
UK gas prices declined further, with the NBP front-month contract at 115.72p/therm, down from 122.26p/therm. TTF front-month also dropped to €48.14/MWh, dipping below the €50 mark for the first time since January. The market remains under pressure due to improving weather forecasts, which are expected to limit heating demand. Norwegian flows were stable at 327mcm, and UK LNG send-out rose to 92mcm/day, supported by 12 LNG cargoes expected in the coming weeks. The potential relaxation of Russian gas restrictions was a topic of speculation ahead of US-Russia discussions, though uncertainty remains on how Europe would react to any shift in policy.
UK power prices also softened, with the day-ahead baseload contract at £109/MWh, down from £117/MWh. The front-month baseload contract declined to £95/MWh, reflecting increased wind generation and lower demand. UK wind output forecasts were revised up by 4GW, now expected to reach 15GW for the coming week. Milder temperatures, 1-3°C above seasonal norms, are also expected to limit demand for heating, putting further pressure on prices.
In broader commodities, Brent crude edged slightly higher to $75.22/bbl, reflecting market uncertainty ahead of US-Russia talks. Carbon prices remained weak, with EUAs at €77.21/tonne, down from €80/tonne. Meanwhile, Henry Hub and JKM gas prices were stable at $3.73/MMBtu and $15.14/MMBtu, respectively.
With geopolitical uncertainty dominating the markets, traders are closely monitoring the outcomes of the US-Russia discussions, while milder temperatures and strong LNG arrivals continue to provide bearish momentum for gas and power prices.