Energy Market Update – 01 August 2025
Energy prices softened on Thursday, with gas and power contracts slipping on improved supply outlook, lower demand, and expectations of stronger renewable output. Oil and carbon markets also edged lower.
UK gas prices rose slightly, supported by strong LNG interest from Asia and fresh Norwegian outages. NBP front-month traded at 85.85p/therm, a small premium over expiring August contracts. European gas prices followed a similar UK gas prices were broadly flat to slightly lower, with the NBP Day-Ahead contract settling at 83.00p/therm. Front-month September prices rose marginally to 86.89p/therm, while Winter-25 increased slightly to 95.01p/therm. The market remained supported by rollover dynamics ahead of the new month, although overall sentiment was muted amid improving fundamentals. UK system demand fell by around 5.6mcm to 154.21mcm/day, while UKCS production dropped sharply by 9.3mcm to 80.00mcm/day. Imports from Norway declined, with Langeled down 5.8mcm/day and Vesterled/FLAGS 3.0mcm/day lower, while IUK flows from Belgium increased slightly. LNG sendout decreased, with South Hook and Isle of Grain together nominating 8mcm/day, and Dragon remaining inactive. Although no UK-bound cargoes are expected, LNG arrivals into continental terminals remain steady, with deliveries from the US, Peru, Algeria, and Russia scheduled in the coming days. Gas-for-power demand was forecast to drop by 6mcm/day as higher wind generation is expected to reduce reliance on thermal supply.
UK power prices dropped notably, with the Day-Ahead baseload falling £7.77 to £75.23/MWh. Forward contracts saw limited movement; September settled at £81.95/MWh and Winter-25 at £86.89/MWh. Peakload prices also dropped, with the Day-Ahead peak falling to £68.32/MWh. The market remains closely tied to gas prices and expectations of shifting generation mixes. CCGT generation continues to dominate, but upcoming increases in wind output and the planned return of the 620MW Hartlepool-1 nuclear unit are expected to ease pressure on gas-fired generation. Interconnectors provided a significant share of supply in recent days, helping to balance the system amid low nuclear availability. Across continental Europe, power contracts showed mixed performance, with French and Italian month-ahead prices rising, while Spanish and German contracts declined.
Commodity markets were slightly bearish. Brent crude dipped to $72.53/bbl, down $0.71, with demand outlooks weakening and global supply remaining ample. Carbon prices slipped, with EUAs down to €72.66/tonne and UK ETS allowances falling to £50.99/tonne. Coal prices also declined, with the ARA CIF Cal-26 contract settling at $112.28/tonne. Currency markets showed slight weakening in sterling, with GBP/EUR falling to 1.1562 and GBP/USD to 1.3205. Warmer temperatures are forecast to persist across northern Europe into early August, though still slightly below earlier heatwave levels, potentially affecting power demand in coming weeks.