Energy Market Update - 21 January 2025
Gas and power prices rose further today, driven by colder weather, weaker renewable output, and market volatility following President Trump’s inauguration and his immediate policy changes.
Natural gas prices have increased across Europe, with the NBP Day-Ahead price reaching 129.00 p/therm, and the NBP February contract trading at 123.60 p/therm. These rises are underpinned by colder-than-normal temperatures across the UK and Europe, although forecasts suggest a warming trend from Friday onwards. UK gas demand remains approximately 42mcm above seasonal norms, with the system opening 6mcm short this morning. Norwegian flows are stable at 340mcm/day despite an ongoing outage at Gullfaks, which continues to limit capacity. Pan-European storage is at 60.24%, reflecting steady withdrawals to meet heating demand. LNG send-outs in the UK are lower today, at 21mcm/day, with eight LNG cargoes expected in the coming weeks.
UK power prices have followed the gas market higher, with Day-Ahead prices at £172.94/MWh. This reflects continued low wind output, which is forecast to average just 1.5GW tomorrow, well below seasonal norms. Further along the curve, UK Front-Month Baseload is trading at £99/MWh, with Front-Season at £88/MWh. In Europe, German Day-Ahead power prices remain elevated due to weak renewables, while French nuclear output reached a robust 56GW yesterday, helping to mitigate price pressures. EUA carbon prices have surged to €79.99/tonne, driven by increased fossil fuel use.
Geopolitical developments have added volatility to the markets. Donald Trump signed an executive order declaring a “National Energy Emergency,” aiming to boost US fossil fuel production and improve energy security. These actions, including withdrawing from the Paris Agreement and reversing LNG export restrictions, have influenced global energy sentiment. Brent crude has declined slightly to $80.15/bbl on expectations of increased US oil and gas supply, while natural gas markets are monitoring potential impacts on LNG exports.
Looking ahead, temperatures are expected to rise above seasonal averages across Europe by the weekend, potentially reducing heating demand and easing pressure on prices. Wind generation is forecast to improve later this week, likely supporting increased renewable output. However, uncertainty over Trump administration policies and ongoing supply constraints in Europe could keep markets volatile in the near term.