Energy Market Update - 01 May 2025
Energy markets posted modest gains as geopolitical tensions intensified and speculative trading pushed up winter gas contracts. Bearish fundamentals such as mild weather and strong LNG supply limited the upside.
Gas prices across the UK and Europe edged higher, with the UK Winter 2025 contract rising by 1.75p to 88.01p/th, breaking a run of declines. This uptick occurred despite stable fundamentals and was largely driven by anticipation of supply constraints from upcoming Norwegian maintenance, set to remove over 70mcm/day of export capacity from 3 May. Front-month contracts also gained slightly, with the TTF settling at €32.32/MWh. However, prompt UK contracts remained under pressure, with Day-Ahead NBP dropping to 76.10p/th as system demand opened long by 10mcm. Weather forecasts suggested a drop in temperatures next week, but current conditions remain well above seasonal norms, suppressing heating demand. LNG flows into the UK slowed, with only two vessels due shortly. Despite this, European gas storage rose to 39.21%, aided by German plans to ease refill mandates from 90% to potentially as low as 70–80% for certain sites, which could reduce summer procurement pressure.
Power markets in the UK remained muted, with the June 2025 baseload contract at £71.20/MWh and the Winter 2025 price inching up to £80.19/MWh. Spot prices eased to £75.30/MWh, as wind output declined but was expected to recover mid-month. A cool weather outlook across Europe lifted expectations for increased gas-for-power generation, especially in France and Germany where renewable availability is forecast to remain low. UK interconnectors continued steady imports from continental markets where prices are slightly lower, maintaining a favourable arbitrage. Meanwhile, nuclear generation is set to improve, with Heysham and Hartlepool units scheduled to return mid-May, restoring over 1GW of baseload capacity and easing pressure on thermal generation.
Brent crude prices fell again, settling at $63.12/bbl on risk-off trading and concerns about higher OPEC+ output. The finalisation of a US-Ukraine strategic minerals deal heightened geopolitical tensions with Russia, casting further uncertainty over ceasefire talks and energy routes. Carbon markets diverged, with EUAs climbing €1.70 to €66.55/tCO2 on compliance positioning and renewed focus on EU climate policy, while UKAs dropped to £47.21/tCO2 amid weaker domestic energy demand. JKM LNG held steady at $11.22/MMBtu, attracting renewed interest from Asian buyers as the region moves into the cooling season. Henry Hub prices dipped slightly to $3.12/MMBtu. LNG cargo flows also showed signs of rebalancing, with more vessels shifting from Europe to Asia, tightening near-term regas capacity availability in North West Europe.