European gas demand is at its highest level since 2011 and pipeline flows from Norway and Russia have reached record levels. Demand will be maintained through 2018, keeping the requirement for Russian pipeline gas above ACQ levels. Gas prices will be supported close to oil-indexation levels. It is not until Q2 2019 that the growth in LNG supply overwhelms the market and gas prices fall to the marginal cost of US LNG. The relative strength of gas prices through 2018 will put some pressure on the economics of CCGT-based power generators – raising base load prices in the UK. But weakening coal prices will push German power prices lower. In 2019, less efficient coal-fired plants will look increasingly unattractive as gas prices fall and even the most modern elements of the coal fleet will be threatened as gas emerges as a real competitor for market share in Germany. This report includes an outlook for European gas balances and forecast North West European gas and power prices out to Q4 2019.