US gas futures nosedrives and drags global prices down with them

Gas prices plummeted on Monday, primarily triggered by a massive sell-off in the US market.

As production recovered faster than expected following Winter Storm Fern which caused “freeze-offs”, US gas futures nosedived, dragging global benchmarks down with them.

This market correction, paired with milder weather forecasts for late February, effectively erased fears of a late-winter supply crunch and pulled UK prices to five-week lows.

While prices dropped sharply yesterday, market analysts remain cautious. European gas storage is currently sitting at roughly 33% capacity—the lowest for this time of year since the 2022 energy crisis.

Baseload power prices tracked the wider energy complex lower on Monday, driven by a sharp decline in carbon allowance prices and a collapse in the global risk premium.

While the sell-off in US gas futures provided the initial bearish anchor, the drop in UK Carbon Allowances (UKAs)—down to roughly £48/tonne—also served as acritical catalyst for future-dated electricity contracts.

This downward pressure was amplified by strengthening wind generation and the return of the Hartlepool 1 nuclear reactor, which significantly improved supply margins.

If you want to see more information on the wholesale market trends subscribe to our weekly report here.

Price commentary courtesy of Crown Gas and Power