Energy Market Update - 20 March 2025
Energy markets surged yesterday, with European gas prices climbing sharply as geopolitical uncertainty and a shift in market sentiment drove bullish momentum. Continued attacks on Ukrainian infrastructure, alongside stalled diplomatic efforts, fuelled risk premiums, while a reversal in fund positioning indicated renewed investor interest in gas markets.
Natural gas prices saw strong gains, with the TTF Front Month contract settling at €43.36/MWh, up from €40.76, while the NBP Front Month rose to 106.20p/therm from 100.01p. The Trump-Zelenskyy call failed to provide any clear path forward, and although Putin agreed to a one-month halt on energy infrastructure attacks, overnight strikes continued. This uncertainty supported prices across the curve. Meanwhile, the latest Commitment of Traders report indicated a halt in the reduction of net long positions, hinting at potential re-entry by funds. Analysts now see resistance for the TTF contract at €46-47.50/MWh, a level last tested in early March. On the supply side, Norwegian gas flows were stable at 325mcm, while EU storage levels stood at 34.25% full, slightly lower than the previous day. The UK expects eight LNG cargoes over the next two weeks, up from six.
UK power prices followed the gas market upwards, with the UK Front Month Baseload contract rising to £92/MWh from £87, while the Front Season contract increased to £88/MWh from £82. Spot power prices saw a marginal decline, with the UK Base Day-Ahead contract settling at £98/MWh, down from £100. A sharp drop in wind generation, falling from 7.5GW to 1.6GW, significantly boosted gas-fired power generation, which accounted for 48.1% of the UK mix. This shift in generation mix provided further upside to power contracts. UK carbon allowances for December 2025 rose by £0.64/tCO2, lending additional support to power prices.
Brent crude edged higher to $71/bbl from $70.78, while EUA carbon prices rose to €73.44/t, up from €71. The Henry Hub gas benchmark increased to $4.25/MMBtu from $4.05, and JKM LNG climbed to $13.76/MMBtu from $13.11. Meanwhile, coal prices firmed, with the ARA CIF contract for 2026 settling at $103.43/tonne. The foreign exchange market saw little movement, with GBP/EUR at 1.1894 and GBP/USD at 1.30.
This morning, European gas markets opened higher, with the TTF Front Month trading at €44/MWh, up €1 from the previous close. UK gas and power markets remain firm, with near-term contracts maintaining their upward momentum amid continued geopolitical uncertainty and shifting market sentiment.