Energy Market Update - 19 February 2025
Energy markets showed mixed movements, with gas prices experiencing volatility due to geopolitical factors and regulatory uncertainty. Power prices softened as increased wind generation forecasts put downward pressure on the market.
European gas markets initially rebounded but resumed their downward trend amid robust supply and weak demand. Prices fluctuated, with the front-month contract ranging between €47.00/MWh and €50.00/MWh. The UK gas contract also saw modest gains, closing at 118.55p/therm. Norwegian gas flows to the UK were lower, while overall EU gas storage stood at 43.37%, significantly below levels recorded in previous years. Market focus remains on the European Commission’s upcoming proposals for flexible gas storage targets, which could influence long-term pricing. The geopolitical landscape remains tense, with ongoing negotiations between the US and Russia creating market uncertainty. Peace talks in Riyadh have been closely watched, as any potential agreement could reshape energy trade flows, particularly with regards to sanctions on Russian gas.
UK power prices declined slightly, with the baseload front-month contract trading at £96.00/MWh. Forecasts indicate increased wind power generation, reaching 15GW in the UK, which has added bearish pressure. European carbon prices also continued to soften, with emission allowances falling further. France’s nuclear generation remains stable, while Germany’s energy policy discussions following recent elections could impact future power pricing. The market is also reacting to the possibility of OPEC+ delaying its planned production increase, which could influence power generation costs in the months ahead.
Brent crude saw a slight increase, reaching $76.53/bbl, as traders assessed global supply dynamics. Coal prices also moved higher, with the 2026 contract trading at $108.50/tonne. LNG deliveries to Europe remain steady, with multiple cargoes expected in the coming weeks, ensuring continued strong supply. Currency markets showed minor fluctuations, with the pound experiencing slight movements against both the euro and the dollar. Global financial markets are also monitoring potential trade policy shifts from the US, which could have broader implications for commodity prices and inflationary pressures worldwide.
Markets remain cautious, with traders closely watching geopolitical developments, regulatory announcements, and supply-demand fundamentals as winter storage targets and summer procurement strategies take shape. The outcome of US-Russia negotiations, combined with EU regulatory changes and shifting weather forecasts, will play a crucial role in shaping the energy landscape in the near term.