The Scottish National Dictionary attributes neugle and its variant spellings - ni(o)gle, nyogle, nyugl etc - as coming from the Old English nicor, the Old Norse nykr, the Middle Low German or the Middle Dutch water demon, necker.
In An Etymological Glossary of the Shetland and Orkney Dialect Thomas Edmondston lists the creature as a niogle crediting a Gothic derivation from gner for horse and el for water; he also records shoupiltin but merely catalogues it as a triton from Shetland.