Energy Market Update - 22 January 2025
Energy markets exhibited significant volatility yesterday, driven by low gas storage levels, reduced wind generation, and geopolitical factors affecting LNG exports.
UK natural gas prices rose sharply, with the NBP spot price settling at 129.50p/therm and February 2025 contracts trading at 126.10p/therm. The TTF equivalent stood at €49.70/MWh, reflecting increased market nervousness around storage levels and supply uncertainties. EU gas storage dropped to 59.38%, with strong withdrawals as colder weather and reduced imports from Russia intensified pressure on supply. The German Trading Hub Europe’s (THE) announcement of subsidies to incentivise summer storage injections drove a bullish reaction, particularly on Summer 2025 contracts. Meanwhile, US LNG supply disruptions further fueled volatility, with Freeport LNG halting flows due to extreme weather. Nine LNG cargoes are expected to reach the UK in the coming weeks, but current uncertainties surrounding Freeport’s capacity to deliver may tighten European supply.
UK power prices climbed sharply, with Day-Ahead Base settling at £241.49/MWh, supported by low wind output and ongoing nuclear outages reducing generation capacity. UK nuclear production was recorded at 3.5GW, down by 1.5GW compared to early January. European Day-Ahead prices similarly strengthened, as colder temperatures increased demand, outpacing supply. Looking ahead, wind generation is forecast to rise significantly, potentially easing gas demand for power generation. However, market participants remain focused on tight fundamentals and regulatory changes, such as Germany’s new gas storage framework.
Geopolitical concerns, including potential disruptions to global LNG supplies, remain critical. Harsh winter weather in the US has already slowed LNG exports, and further interruptions could exacerbate Europe’s supply challenges. Additionally, the potential for sanctions on Iran and uncertainty around the Strait of Hormuz could add further volatility to global energy markets. In broader markets, Brent oil prices stood at $79.29/bbl, and carbon allowances (EUAs) remained steady at €80.27/tonne. Both metrics reflect stable yet cautious sentiment amid global energy supply constraints.
Energy prices remain elevated, with continued focus on storage levels, LNG flows, and weather-driven demand. The interplay of geopolitical risks and domestic supply challenges is expected to keep markets volatile in the coming days.