Markets react to demand pressures and Trump’s tariff rhetoric on Greenland

NBP gas prices soared on Friday as forecasts of above-average demand across Europe overlapped with persistently low regional storage levels.

The February 26 front-month contract posted intraday gains not seen since the energy crisis, surging 11.5% when compared to its previous close.

Near-term bullishness filtered into the front season contracts, with Summer 26 up circa 4p/therm (0.14p/kWh) and Winter 26 up 5p/therm (0.17p/kWh) also representing intraday volatility not seen for quite some time.

According to the latest data from Gas Infrastructure Europe, continental storage facilities were 50.36% full on 17th January. This is 11.36% lower than the same date last year and 26.37% lower than in 2024.

Howevber, we have seen a reverse of much of Friday’s gains, thanks in part to downward revisions to demand forecasts and Trump tariff rhetoric on Greenland serving to weigh on the economic growth outlook of the UK and the European single market.

UK baseload power contracts tracked the dramatic swings in the gas market on Friday, with bullish momentum in NBP pricing rapidly filtering through the power curve.

Wind generation continued its downward trend, averaging just 9GW (21.3% of the generation mix) across the day.

This reduced renewable contribution tightened system margins and further increased reliance on fossil fuel generation.

As a result, gas-fired output rose to 16.2GW (41.9%), reinforcing gas’s role and amplifying the impact of rising NBP prices on power contracts.

The combination of weaker wind availability and firmer fuel costs created a supportive backdrop for power prices, with the market remaining highly responsive to any further adjustments in supply–demand dynamics.

This morning’s open saw a pronounced pullback as demand expectations softened, unwinding much of Friday’s risk premium such as was seen on the NBP.

The US has announced new tariffs of 10% (potentially rising to 25% in June) on the UK and several other European countries to pressure them into agreeing to a deal for the US to purchase Greenland.

These tariffs target countries that took part in recent military exercises in Greenland, which the US sees as opposing it’s plans.

European leaders have strongly criticised the move, saying it risks damaging relations between the US and Europe.

For the affected countries, the tariffs could make it more expensive to sell goods to the US, potentially hurting businesses and slowing economic growth.

In energy markets, this tension could create more uncertainty and price swings, as global gas and power markets often react to political and trade disputes.

This news could have contributed to the strong reversal we are seeing this morning, with any downward revisions to economic growth typically triggering a downgraded view of longer-term demand, particularly from the industrial/manufacturing sector.

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Price commentary courtesy of Crown Gas and Power