European power markets have been in a curious position of having very tight day head markets, but falling for the remainder of the winter. The price of hour 19 (1700 to 1800) on the N2EX day-ahead market significantly surpassed its November higher reaching an impressive 470 £/MWh. This tightness during the evening peak was repeated to varying degrees in power markets across north-west Europe as falling wind generation and cold weather led to increased demands on gas in the power mix. This has been caused by another high-pressure weather system that has supressed wind speeds. However, over the weekend, lower pressure systems are expected to move in across the Atlantic and the Met Office long range weather forest anticipates unsettled weather for much of the rest of December. This should ease the present tightness in the day-ahead market.
Looking further ahead, power forward prices are falling and gas prices are lower in both Europe and Asia. There are reports of weakening demand for LNG in China and importers reselling contracted cargoes as storage capacity is filling up. This increases the availability LNG for Europe and prices are falling. Unusually strong French nuclear output is also helping, combined with an outlook for winder weather and stronger renewable output ahead.
European gas in storage is now down to 80% of capacity, compared to 90% at the same time last year. But this is by no means a worrying position at this stage in the winter and the markets are starting to question weather recent highs in the gas and power futures markets are justifiable.
| Commoditiy | Front contract (£p/therm) | Summer 25 (£p/therm) | Winter 25/26 (£p/therm) | Summer 26 (£p/therm) |
|---|---|---|---|---|
| Price | 106.18 | 101.00 | 100.80 | 82.68 |
| Weekly Change | -9.82 | -6.82 | -4.62 | -1.06 |
| Commoditiy | Front contract (£/MWh) | Summer 25 (£/MWh) | Winter 25/26 (£/MWh) | Summer 26 (£/MWh) |
|---|---|---|---|---|
| Price | 91.45 | 77.76 | 83.40 | 65.98 |
| Weekly Change | -6.95 | -4.17 | -2.64 | -0.46 |
| Commoditiy | US Gas ($/mmbtu) | Brent ($/b) | EUA (€/MT) | UKA (£/MT) |
|---|---|---|---|---|
| Price | 3.46 | 73.38 | 66.10 | 34.44 |
| Weekly Change | 0.38 | 1.29 | -1.24 | -1.73 |
No representation or warranty, express or implied, is or will be made and no responsibility or liability is or will be accepted by Investec or its Affiliates in relation to the accuracy, reliability, suitability or completeness of any information contained in this document and any such liability is expressly disclaimed. This document does not purport to be all inclusive or to contain all the information that you may need. Investec gives no undertaking to provide the recipient with access to any additional information or to update this document or any additional information, or to correct any inaccuracies in it which may become apparent.
This document does not take into account the specific investment objectives, financial circumstances or particular needs of any recipient and it should not be regarded as a substitute for the exercise of the recipient’s own judgement and due diligence. Investec does not offer investment advice or make any investment recommendations. Recipients of this document should seek independent financial advice regarding the appropriateness or otherwise of investing in any investment strategies discussed or recommended in this document and should understand that past performance is not a guide to future performance, and the value of any investments may fall as well as rise.
Investec expressly reserves the right, without giving reasons therefore, at any time and in any respect, to amend or terminate discussions with the recipient of this document without prior notice and hereby expressly disclaims any liability for any losses, costs or expenses incurred by such recipient.
