Energy Market Update - 16 December 2025
Prices firmed early on carbon strength and tighter prompt fundamentals before easing on afternoon peace talk headlines. Supply remains comfortable, with robust Norwegian flows and strong LNG cover keeping moves contained.
Gas markets were well supplied. Norwegian pipeline exports held near 340 mcm per day and US feedgas stayed high, though slightly lower week on week. European LNG intake reached a near nine month high last week at about 4.5 bcm, up 32 per cent on the prior week, adding headroom across North West Europe. EU storage stood at 71.6 per cent after a run of withdrawals as operators optimise units into year end. Lower wind and a cooler bias across parts of Europe lifted early gas for power demand, then gains faded as talk of progress in negotiations prompted selling. Near curve contracts ended off intraday highs but the broader balance remains steady given pipeline and LNG availability.
Power followed gas. Day ahead firmed during low wind hours as CCGT covered the stack, with interconnectors providing additional margin. Forward prices edged higher with fuels before retracing late in the session. Next week’s wind is expected to be more supportive than recent days, which should cap prompt sparks when output improves, although any further dips in renewables will keep the evening peak sensitive. Nuclear availability was broadly stable and continental flows helped steady prices during tighter blocks.
EU carbon rallied to a two year high, supported by option expiry dynamics, the year end auction pause and incremental hedging from the shipping sector ahead of wider ETS coverage in 2026. UKAs were more measured but recovered part of recent losses. Oil was little changed, coal held near recent averages, and international LNG markers stayed close to European hub parity, reinforcing Europe’s comfortable supply position despite intermittent weather and headline risk.