Energy Market Update – 01 July 2025
Markets showed little clear direction yesterday as natural gas traded sideways amid limited geopolitical tensions and healthy supply, while power prices edged up slightly, supported by low wind output and persistent high temperatures across Europe.
Natural gas markets were largely flat, with the UK NBP front-month trading between 77 and 78 pence per therm and the TTF front-month between €32.80 and €33.40/MWh. The muted movement was driven by a combination of weak demand and stable supply. High temperatures across the continent kept gas demand subdued, with no major geopolitical developments disrupting sentiment. UK spot gas settled at 78.25p/therm, while the equivalent TTF contract was at €33.19/MWh. Although the planned maintenance at Norway’s Troll gas field temporarily reduced its output, overall Norwegian flows rose to the highest level since mid-May, helping to stabilise the system. UK system demand increased to 164.52mcm, up from the previous day, with strong exports to Belgium and the Netherlands limiting domestic storage injections. LNG sendout remained steady at around 8mcm/day, though slightly lower, and no new tankers are expected in the coming days. EU gas storage rules are now unlikely to be formalised before September, easing short-term regulatory pressures on suppliers.
In power markets, UK day-ahead baseload rose to £94.17/MWh, driven by a tighter system balance and stronger demand from gas-fired generation. Persistently low wind output and unseasonably high temperatures lifted cooling demand, increasing reliance on thermal capacity. Wind generation is forecast to remain below seasonal norms until the end of the week, reinforcing gas-for-power demand. In France, EDF reduced output at the Golfech 1 reactor due to high river temperatures, cutting 1.3GW of nuclear capacity and placing upward pressure on regional prices. Forward UK power contracts were stable to slightly lower, with the August baseload contract at £69.60/MWh. The UK government’s roadmap to triple solar capacity by 2030 has generated some longer-term optimism, although short-term market effects remain limited.
In broader commodity markets, Brent crude eased to $67.61/bbl as expectations grew that OPEC+ may increase production in August following earlier monthly hikes. The prospect of rising supply has added bearish pressure. European carbon prices also softened, with EU Allowances for December 2025 falling to €68.97/tonne and UK ETS permits dropping to £46.08/tonne, reflecting reduced industrial activity and weaker energy demand forecasts. Coal prices were relatively steady, with the ARA CIF Cal-26 contract edging up to $111.90/tonne. LNG arrivals in Europe remain strong, with multiple US cargoes arriving or scheduled this week, reinforcing regional supply confidence despite modest day-on-day sendout reductions.