Energy Market Update - 30 January 2025
European gas and power markets continued their upward trend yesterday, driven by colder weather forecasts, storage concerns, and Norwegian supply disruptions. Lower wind generation and heightened demand for gas-fired power further supported price gains.
Natural gas prices saw a significant rally, with the UK NBP spot rising to 131.00p/therm and the Dutch TTF spot reaching €52.00/MWh. The TTF front-month contract remained above the key resistance level of €50/MWh, a threshold the market has struggled to surpass in recent weeks. Norwegian supply constraints, including outages at Asgard, Troll, and Gullfaks, have reduced gas flows to Europe, prompting increased withdrawals from storage. EU gas storage levels currently stand at 55%, while Ukraine’s storage has fallen to just 12%, increasing pressure on alternative supply routes. The UK system opened 15mcm long today, with LNG send-outs rising to 66mcm/day as additional cargoes arrive to support supply.
The power market followed a similar bullish trajectory, with UK day-ahead baseload prices climbing to £130.70/MWh and the German spot price rising to €141.02/MWh. A combination of lower wind generation and below-seasonal temperatures has heightened reliance on gas for electricity generation. The risk of “Dunkelflaute” – a period of low wind and solar output – across parts of Europe this weekend is expected to add further pressure on power markets. In the UK, speculation surrounding a potential linkage between the UK and EU carbon trading schemes has driven carbon prices higher, with UKA reaching its highest level since September.
Looking ahead, revised weather forecasts indicate that February temperatures will remain below seasonal norms, sustaining strong gas demand. Market participants are also monitoring developments in Germany’s Trading Hub Europe storage product, which could impact future gas procurement strategies. Meanwhile, LNG imports into Europe remain robust, with 100 cargoes from the U.S. expected by the end of January—a record for the region. Despite ample LNG arrivals, continued geopolitical uncertainty and storage dynamics are likely to keep markets volatile in the near term.