Energy Market Update - 23 January 2025
Gas and power prices displayed mixed movements today, reflecting shifting temperature forecasts, supply uncertainties, and broader market dynamics. European storage withdrawals remain a key focus as demand fluctuates.
UK natural gas prices eased slightly early in today’s session but climbed later, with the NBP Day-Ahead trading at 124.25p/therm and the TTF Front Month at €49/MWh. These movements follow ongoing concerns over storage withdrawals and supply reliability, including disruptions at Freeport LNG earlier this week. Freeport has resumed some feedgas activity, though flows remain below capacity. Warmer European temperatures reduced gas demand for heating, but the UK lags behind with colder conditions expected until Friday.
European gas storage levels are now reported at 58.5%, a notable withdrawal rate as demand rises. This mirrors storage trends from 2021, with sites nearing critical lows. The NBP spot market retains a premium over the TTF, though this may compress as the UK and European temperatures rise and gas demand eases. Meanwhile, Norway’s Gullfaks field remains offline, contributing to lower supply volumes from the region, with Norwegian flow nominations to the UK at 334 mcm/day.
UK power prices softened today, with the Day-Ahead Baseload price falling to £107.04/MWh and the Front Month Baseload trading at £101/MWh. Warmer temperatures and increased wind generation across Europe—forecast to exceed 15.5 GW in the UK next week, 20% above seasonal averages—are reducing demand for gas-fired power generation. This follows a volatile period for Day-Ahead prices, which spiked earlier this week but are now trading below February contracts.
European power prices also edged lower, supported by higher renewable energy output and slightly milder weather. In contrast, long-term uncertainty remains due to colder forecasts from late January into February. These dynamics are being closely monitored by market participants as they assess procurement needs for the remaining winter months.
Broader market influences include geopolitical concerns and economic factors. The EU’s incentivised gas storage initiatives and the absence of Russian piped flows through Ukraine continue to shape the European energy landscape. Nine LNG cargoes are expected to arrive in the UK over the next two weeks, potentially easing supply constraints.
In the oil market, Brent crude remained steady at $79/bbl, while EU carbon allowances (EUAs) fell slightly to €78.94/tonne. Weaker global economic growth projections and potential tariff impacts from the Trump administration are weighing on market sentiment.
As temperatures trend warmer and renewable generation increases, short-term relief may be felt in both gas and power markets. However, storage levels and potential supply-side risks keep longer-term uncertainty elevated.