Energy Market Update - 24 February 2025
Energy markets continued their downward trend, with gas and power prices softening amid mild weather, robust LNG supply, and geopolitical uncertainty. With the end of the winter delivery period approaching, traders remain focused on storage levels, policy developments, and geopolitical negotiations.
European gas prices declined further, with the TTF Front Month contract settling at €46/MWh, down €1 from the previous close. The UK NBP Front Month contract also fell to 112p/therm from 113.55p/therm. Day-ahead prices in the UK dropped to 109p/therm, reflecting the weak near-term demand.
Norwegian gas flows remained steady, with nominations at 326mcm, ensuring stable supply. The unplanned outage at the Norwegian Åsgard gas facility, which had removed 7mcm/day from supply, ended on Saturday. Meanwhile, European gas storage stood at 40.76% full, with withdrawals remaining subdued due to milder-than-expected temperatures and strong LNG inflows.
LNG arrivals remain consistent, with 14 cargoes expected in the UK over the next two weeks, matching the previous forecast. Global LNG markets continue to be weighed down by weak Asian demand, which has dropped to a near two-year low, diverting more cargoes to Europe.
Despite geopolitical tensions, including ongoing discussions between the US and Russia over Ukraine, there have been no immediate supply disruptions. Reports indicate that the US-Ukraine mineral deal is moving forward, with draft agreements now being reviewed. Meanwhile, France and the UK are set to meet with President Trump this week, reinforcing Europe’s stance on future negotiations.
UK power prices softened alongside gas, with the Front Month Baseload contract trading at £91/MWh, down from £92/MWh. The UK spot price also dropped to £71/MWh, from £73/MWh, primarily due to strong wind generation, which is averaging 12GW for the week.
Although average wind forecasts were revised down slightly, they remain at comfortable levels, limiting gas-fired power demand. Gas-fired CCGTs are currently generating only 4.3GW, highlighting the reduced need for gas in the power mix. In Germany, a similar situation has emerged, with renewables contributing 3.5GW, well above seasonal norms.
However, upcoming nuclear maintenance could introduce some volatility. One of the two reactors at Heysham 1 is offline for maintenance, removing 610MW from supply, and this is expected to last until the end of March. Additionally, Hartlepool is set for an outage later this month, removing another 666MW from the grid. European carbon prices saw some fluctuations, with EUA prices at €74/tCO2e, up slightly from €73/tCO2e. The UK ETS market followed suit, pricing at £40.66/tCO2e.
Brent crude weakened to $74.43/bbl, reflecting the impact of increased exports from Kurdistan, where Iraq is expected to receive 184,000 bpd. The additional supply has softened oil prices, despite geopolitical concerns. Coal markets also moved lower, with the 2026 contract at $105.99/tonne, down from $107.72/tonne.In the global gas market, Henry Hub gas was priced at $4.23/MMBtu, while JKM LNG held steady at $14.18/MMBtu, with the TTF equivalent at $14.46/MMBtu.
With only a month left in the winter delivery period, market focus remains on EU gas storage policy changes, the continuation of US-Russia negotiations, and shifting weather forecasts. While short-term fundamentals remain bearish, upcoming regulatory decisions and geopolitical movements could introduce volatility in the weeks ahead.