In 2017 LNG imports will increase over 50% on 2016 levels. However, declining indigenous production will largely counter this growth and sustain Europe's requirement for Russian gas imports. Our gas price forecast averages US$5.8/mmbtu, close to an oil-indexed proxy. The outlook changes in 2018, as gas prices are set to fall, with a price floor being set by the cash cost of US LNG imports. In power, the relief from supply constraints – raised in the latter part of 2016 by French nuclear outages – reducing coal prices and renewable production will see German base load power prices average 36.8/MWh in 2017. Although this price is above 2016 levels, spreads available to coal and gas generators will be less attractive this year. Gas into power will be more attractive in the UK, where we expect base load power prices to average £45.4/MWh ( 53.1/MWh) in 2017. This report includes an outlook for European gas balances and forecast North West European gas and power prices out to Q4 2018.