Energy Market Update - 18 March 2025
Energy markets opened the week on a bearish note, with gas and power prices softening as traders focused on geopolitical developments and storage levels. Expectations of a Trump-Putin phone call today regarding a potential ceasefire in Ukraine have kept sentiment cautious, while forecasts for warmer temperatures later this week have added to the downside pressure.
European gas prices edged lower on Monday, with the TTF front-month contract settling at €41.25/MWh, down from €42.29/MWh. The UK NBP front-month also declined, closing at 100.94p/therm from 103.89p/therm. A key factor weighing on prices is continued discussion over making EU gas storage fill targets more flexible, potentially easing price volatility. Storage levels have now dipped to 34.84% full, down from 35.01%, with France and the Netherlands notably holding just above 20% each. Norwegian gas flows to the UK fell to 312 mcm/day from 333 mcm/day, partly due to an unplanned outage at the Asgard gas field. UK LNG arrivals are set to slow, with six cargoes expected in the coming weeks, down from eight.
UK power markets followed the weaker gas trend, with the front-month baseload contract falling to £86/MWh from £88/MWh, and the front-season contract easing to £82/MWh from £84/MWh. Spot power prices also declined to £94/MWh, down from £99/MWh. While wind generation forecasts remain volatile, the near-term outlook suggests a slight shortfall in expected output, particularly later in the week. The UK system opened undersupplied by 8mcm/day this morning due to reduced Norwegian flows via Langeled, adding to potential short-term price support.
Brent crude remained steady at $71/bbl, unchanged from the previous session, as markets balanced ongoing geopolitical tensions with expectations of weaker global demand. European carbon prices eased slightly, with EUA Dec-25 contracts slipping to €70/tCO2e from €71/tCO2e. JKM LNG prices also weakened, falling to $13.18/MMBtu from $13.47/MMBtu, reflecting continued softness in Asian demand.