The gas market is a bit like football: a game of two halves! Fairly tight with high(ish) prices in the next 2 years but easing significantly from 2027 onwards.
One of the great market uncertainties seems to have been resolved in the last few months. After declining for the last 2-3 years, gas demand now seems to be rising again in Europe. Winter 2024/25 demand is expected to be around 10bcm/year higher by the Oxford institute of Energy Studies with 2025 demand expected to be around 3% higher. World gas demand rose almost 3% in 2024.
Although this occurred mainly in Asia it will still have a big impact on the world LNG market and hence on markets in Europe. This combined with the cessation of gas transport through Ukraine from 1 st January seems to have tightened the market up recently. Day ahead prices in the UK
averaged around 124p/therm in January compared to 75p in the same month last year and 107p in Q4 last year .
It is widely anticipated that the world LNG market will move into surplus sometime around 2026 or more likely 2027. We expect prices at both NBP and TTF to stay firm until 2027. Current forward curve prices for the NBP and TTF are set out below showing in both cases a big drop by 2027 and
2028, compared with current levels.
