Energy Market Update – 02 June 2025
Energy prices opened the week on a cautious footing following a sharp Friday sell-off, led by renewed US tariff threats and global recessionary concerns. Markets saw slight rebounds on the backend of gas and power contracts, but the overall tone remains bearish.
Natural gas markets continued to decline early in the week, with macroeconomic uncertainty and ample near-term supply placing pressure on contracts. On Friday, the UK NBP front-month fell by 3.54p to 79.62p/therm, while the Dutch TTF front-month dropped to €34.23/MWh. This extended a week-long downtrend as concerns about weaker global demand weighed heavily. Early Monday saw some stabilisation, with the UK Day-Ahead price rising slightly to 81.75p/therm, aided by a long system and reduced demand. Norwegian flows have fallen to 285mcm due to planned maintenance, with further reductions expected as up to 100mcm/day may be curtailed in the coming weeks from key pipelines including Langeled and Vesterled. Despite this, UK gas balances remain healthy due to steady domestic production and limited LNG send-out. South Hook nominations were slightly lower at 5.1mcm, and only two LNG cargoes are scheduled for imminent UK delivery, reinforcing the trend of subdued send-out. European storage reached 48.32%, a marginal weekly gain, yet still lags behind the same period last year, sparking concern over the pace of refilling ahead of winter.
Electricity prices mirrored the downward gas trend, with UK Day-Ahead baseload closing Friday at £59.85/MWh. Weekend power saw negative prices on Sunday driven by strong wind output. The UK Front Month Baseload has since edged up to £73.44/MWh, although it remains suppressed. French baseload contracts have stayed below UK levels, continuing to incentivise imports through the IFA and Nemo links. Renewable generation remains robust, with wind and solar output reducing reliance on thermal generation. UK gas-for-power demand stood at just 11mcm/day, and combined cycle gas turbine (CCGT) utilisation has stayed low, adjusting only with renewable intermittency. French nuclear availability has improved with no major outages forecast, reinforcing the subdued power pricing for Q3-25 delivery. Forecasts show wind speeds averaging 5–6 m/s next week, slightly below normal, which could lift gas burn modestly but not enough to shift the current bearish market structure. Meanwhile, UK carbon allowances fell further to £51.26/t, tracking broader declines in EUAs amid a weakening demand outlook and speculative selling.
Brent crude declined to $63.90/bbl despite geopolitical tension stemming from further Ukrainian strikes on Russian military assets. OPEC+ reaffirmed its decision to maintain output levels, and global markets appear well supplied. US WTI rose slightly to $62.75/bbl due to a weaker dollar. In LNG markets, prices continued to ease. The Japan-Korea Marker fell to $12.16/MMBtu, and European TTF-linked cargoes averaged around $11.41/MMBtu. High regasification rates persist in northwest Europe, but the UK’s lower price premiums have limited inbound cargoes, with only two scheduled arrivals. European carbon prices also slipped, with EUAs falling to €70.41/t, down from €70.94. The UK ETS tracked lower in tandem, reflecting concerns over industrial demand and potential economic slowdown. Coal prices also fell slightly, with the ARA CIF Cal-26 benchmark dropping to $102.04/tonne, echoing the broader weakness across energy commodities.