Energy Market Update - 20 February 2025
Energy markets continued their downward trend yesterday, driven by mild temperatures, strong renewable generation, and stable supply levels. Despite this, some contracts opened higher this morning as traders reassess supply risks and demand expectations.
UK and European gas prices declined in Wednesday’s session, pressured by mild temperatures and ample supply. The UK NBP front-month contract settled at 114.98p/therm, down from 117.90p/therm. The Dutch TTF front-month contract also dropped to €48.26/MWh from €49.22/MWh. Warmer-than-average temperatures are expected to persist into late February, reducing heating demand.
EU gas storage levels are at 42.59%, in line with refill targets set last year, but lower than some market participants might prefer. Norwegian pipeline flows remain stable at 333mcm/day, while 12 LNG cargoes are expected in the UK over the next two weeks. The European Commission is preparing to propose more flexible gas storage refill targets for winter 2026, which could impact longer-term pricing.
This morning, the TTF front-month contract opened lower at €47/MWh, a €1/MWh drop from the previous settlement, reflecting the overall bearish sentiment.
UK power prices declined further, following losses in the gas market and increased wind generation. The UK day-ahead baseload price fell to £88/MWh, down from £100/MWh. The UK front-month baseload contract settled at £93/MWh, a £3/MWh drop from the previous session.
Wind generation is forecasted to remain strong, averaging 15 GW, more than 20% above seasonal norms over the next two weeks. This is expected to keep downward pressure on power prices. UK carbon prices also declined, contributing to softer market conditions.
Brent crude remained stable at $76.04/bbl, with market focus on OPEC+ production and geopolitical uncertainties. EU carbon allowances (EUAs) dropped to €74/t, down from €76/t, tracking the broader energy complex. Henry Hub gas prices rose slightly to $4.28/MMBtu, while Asian LNG benchmarks (JKM) slipped to $14.12/MMBtu.
Overall, the market remains bearish in the short term, with mild weather and strong supply keeping prices under pressure. However, geopolitical developments and upcoming European storage policy changes could impact future price movements.