Energy Market Update - 29 January 2025
UK gas and power prices have moved higher, supported by colder weather, lower renewable output, and Norwegian supply disruptions. Broader energy markets are also reacting to geopolitical developments, economic updates, and movements in oil and carbon prices.
UK natural gas prices edged up yesterday, with colder weather increasing demand and Norwegian supply issues limiting flows. The NBP spot price reached 123.10p/therm, while the TTF spot price climbed to €51.38/MWh. Norwegian curtailments at Asgard and Troll, removing 24mcm of capacity, kept the supply side tight. LNG imports are improving after delays due to poor weather, with 12 cargoes expected in the coming weeks. However, storage economics remain a concern, as summer contracts are priced higher than winter, challenging usual refill strategies. European storage levels stand at 55.46% full, slightly lower than the previous day.
UK power markets also gained, with the UK spot base price reaching £115.92/MWh, supported by weaker wind generation forecasts. Low wind output is expected to persist across Europe into mid-February, further driving reliance on gas-fired generation. The government is reportedly considering merging the UK and EU carbon trading schemes, which could impact carbon prices. EUA carbon prices edged up to €80.26/tonne, while UK power contracts also strengthened, with the front-month baseload contract reaching £105/MWh.
Brent crude prices remained stable at $77.49/bbl, while geopolitical concerns continue to shape sentiment. The Danish Energy Agency has approved preservation works on the damaged Nord Stream 2 pipeline, though this does not signal a restart. Meanwhile, US trade policies, including potential tariffs on Canadian and Mexican oil, could impact North American energy flows. In currency markets, the pound remains under pressure ahead of an expected speech by the UK Chancellor on economic growth, which could influence FX movements.