Name: ICD Energy Managers
Address: Q16, Quorum Business Park, Benton Lane,, Newcastle Upon Tyne, Tyne and Wear, NE12 8BX, United Kingdom
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Market Insight

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Wed, 5th Mar ’25

GAS

Summer-25 is now sustaining a steady discount versus Winter-25, reflecting surely an increased confidence of Europe’s abilities to replensih gas stocks in time for winter delivery.
Forwards are now reasonably backwardated (delivery prices decreasing y-o-y the further out you go) – please see context chart below detailing historical/present/future.
Industrials have had an uncomfortable 6-months waiting to see how Forward prices would shape up (following the end of the Ukraine/Russia transit agreement at the turn of the year), but, as things stand, Seasonal Forwards are back to levels last seen at the end of 2023 (before the geopolitical disquiet of 2024).
Of course, we’re by no means out of the woods, but with the onset of Summer-25 now only 26-days away, a retest of the lows of Feb-24 is surely increasingly on the cards, if/when summer conditioning begins in earnest.
The Trump wrecking-ball continues to swing in ever erratic/unpredictable directions following on from the ugly scenes in the Oval Office last week – most notably having halted military assistance to Ukraine.
Trump announced yesterday that he was in receipt of a letter from President Zelenskiy stating Ukraine was ready to come back to the negotiating table with a view to agreeing the minerals deal.
The market likes the idea of the US having business interests in Ukraine, as it’s unlikely Putin will be able to continue with his land-grab (and it will be easier for the US to facilitate resumed gas flows out of Russia).
As such, Forward prices this morning are within touching distance of 100p/therm – if this psychological level breaks to the downside, the coming weeks could see good buying opportunities for Industrials.
Of course, the negative impact that US tariffs are likely to have on global economic growth are starting to weigh on ALL markets.
Encouragingly, European/UK weather forecasts for the coming weekend are expecting temperatures above seasonal norms, though wind outputs remain patchy into next week – so gas-for-power burn (and the associated storage withdrawal) will remain a supportive driver until further notice.
Inevitably, the benchmark JKM/TTF spread (a useful barometer of comparative values) has drifted into positive territory (following the recent slide in European/UK gas prices) – meaning cargoes will make more money heading to Asia (so all eyes will be on Chinese demand over the coming weeks).
Thankfully, however, Trump tariffs (and the corresponding retaliatory tariffs coming out of China) may continue to encourage cargoes in our direction – time will tell…
Monthly Day-Ahead averages for this month so far are on track to improve on last month’s final number (124p/therm), with averages at 106p/therm at the time of writing (or approx. 3.6p/kwh excluding non-gas).

ELECTRICITY & CARBON

As is pretty much always the case (given the UK’s reliance on gas-for-power generation), electricity prices are tracking gas prices down.
Near-term delivery will remain sensitive to (and supported by) renewables weakness.
Today’s UK electricity generation mix however, is bearish in nature with renewables contributing 53%, thermal at 12% (gas and coal) and low carbon at 22% (nuclear and imports).
The Carbon markets remain closely correlated to fossil fuel prices – so as you’d expect, EUAs and UKAs remain under pressure.
Talk of Starmer’s intentions to merge EUAs/UKAs has gone from the headlines, and UKAs resumed their bearish bias with a confirmed downward trend channel forming back on 10th Feb.
Prices (now at £39.87/tn on the mid) fell out of the bottom of the long-term bullish trend channel on 20th Feb, then retested this resistance level from beneath on 27th Feb, rejecting to the downside.
If prices break below £39/tn, the next target below is £37/tn as per the high of 3rd Jan.
Monthly Day-Ahead averages so far for this month are back below £100/mwh at £94/mwh (or approx. 9.4p/kwh excluding non-energy).