December 2025 delivered a structurally bearish (downward price movement) yet volatile month for UK gas and power markets, however, the final week saw most of the month’s losses reversed.

Prices tested multi-year lows in the first half of the month on soft demand expectations and abundant supply, before repricing higher later in December as colder weather forecasts emerged.

Robust LNG supply, strong Norwegian flows and easing geopolitical premiums underpinned the market early on, but late-month cold and sporadic operational disruptions drove a modest but meaningful re-evaluation of risk and therefore market prices.

The month opened with continued downward pressure on UK and European gas prices, tracking a broader bearish trend that began in November. The mild temperatures seen throughout the first half of Win-25 suppressed heating demand, limiting overall gas demand and therefore weighing on prices.

Strong LNG output remained a central feature of the supply backdrop, with multiple Atlantic cargoes unloading at UK terminals and elevated send-out helping balance the system early in the month. Norwegian pipeline nominations also stayed high, further loosening fundamentals. The combination of mild weather, strong LNG logistics and healthy pipeline flows drove UK gas curves lower through the first fortnight. Seasonal forecasts repeatedly revised warmer than long-term normals, reinforcing short-term bearish sentiment.

However, later in the month weather models began showing a shift toward colder patterns and below-seasonal wind speeds- a key driver of seasonal gas demand and gas-for-power utilisation in the UK. Prices responded, with gas and power contracts repricing higher off multi-month lows as traders began to factor winter risk back into their market valuations. This trend carried into the end of the year, supported by a particularly cold outlook for the start of 2026.

Geopolitical risk steadily faded as a price driver through December. Early optimism around US-led Russia-Ukraine peace talks exerted downward pressure across the energy complex, even though concrete breakthroughs remained elusive. However, market participants are increasingly pricing out the probability of near-term escalation, reducing the embedded risk premium along the curve.

This sentiment was reinforced by the EU’s formal agreement to phase out remaining Russian gas and LNG imports by 2027. While significant from a policy perspective, the announcement largely formalised existing expectations and had limited immediate impact on pricing.

Global LNG supply remained strong throughout the month, led by sustained high output from the United States. European LNG imports accelerated as Asia showed limited appetite for spot cargoes amid mild weather and ample inventories. By mid-December, Europe had imported over 33bcm of LNG since the start of the winter, significantly higher than the same period in 2024.

Storage dynamics provided the main source of latent bullish (upward price movement) risk as the month progressed. Northwestern European storage entered the final week of December well below recent seasonal averages, ending the year under 55% full. With colder conditions forecast into early January and February, the market began to price in faster withdrawal rates and reduced flexibility later in the winter, supporting the late-month recovery in prices.