Feb25 Energy Market BriefStrong Recorded Gains

In January, we observed an upward sentiment across all tracked NBP gas contracts in the month.

Gains across these contracts were relatively consistent, both in the shorter-term as well as further out on the forward curve.

On average, seasonal gas contracts from summer 25 to summer 27 were 8.7% higher in January compared with the previous month, with the most significant average price gains concentrated across summer 25 and summer 26 (up 9.6% and 10.9%, respectively).

More broadly, January registered lower levels of wind generation when compared to the record-breaking levels seen in December, subsequently placing higher demand on more expensive fuelled generation like gas.

Likewise, we observed a period of higher outage levels throughout select plant and gas fields across the Norwegian Continental Shelf (NCS),decreasing flows into GB and limiting supply on the gas network as a result.

To date, EU and UK gas storage levels have seen notable decreases ending the month at 55% fullness, compared to the 70% fullness seen at the end of January 2024, increasing gas prices on the continent and providing a bullish price signal for the UK market to follow.

Gas storage stocks fell at faster rates across January due to multiple instances of below average temperatures, alongside low wind generation increasing the requirement on gas from storage and limiting refill opportunities.

As a result, we saw day-ahead gas rise across the month, up 9.7% to average 122.25p/th, reaching the highest level seen since October 2023 at 131.60p/th on 29 January.

Similarly, front-month contracts were up 7.0% on average from December, with February 25 averaging 120.61p/th and March 25 at 118.97p/th.

Day-ahead power prices followed their gas counterpart and registered a much stronger month-on-month gain, up 30.4% on average to sit at £125.51/MWh.

This increase was likely the result of lower wind generation throughout the month, with prices reaching the highest level seen since December 2022 at £280.02/MWh on 21 January.

According to BMRS data, wind generation accounted for just 0.5% of the generation mix at 9:00AM on the 21 January, with transmission connected wind supplying <100MW to the market.

Further contributing to this was a reported partial outage at the Heysham 2-8 nuclear reactor, exacerbating the reduction in available supply volumes.

Similarly, longer term power contracts exhibited gains with the front-month power contracts, February 25 and March 25, rising 5.2% on average to sit at £100.37/MWh and £95.02/MWh, respectively.

Likewise, seasonal power prices increased on average by 6.5% month-on-month.

Brent crude price rose 7.5% higher to 78.44/bl on average, with prices rising to 81.39/bl on 16 January – the highest level seen since July 2024.

Concerns surrounding supply levels grew following sanctions on Russian oil set in place by the US.

Current sanctions are impacting supply across Europe, China, and India, key importing regions, with the former Biden administration sanctioning more than 100 tankers and two Russian oil producers, impacting the supply of nearly 1mn barrels per day of oil from Russia.

Across the EU and UK carbon markets a mixed trend was seen, with the EU ETS carbon price rising 13.9% €77.46/t.