Energy Market Update - 03 December 2025
Markets eased on Tuesday as near-curve gas fell and sentiment at the NBP turned more bearish. Prices slipped despite fresh geopolitical risk from stalled Russia-Ukraine talks.
Gas moved lower across the prompt and front month. Selling was concentrated at the UK hub, where softer bids and thin liquidity pulled the curve down. Fundamentals remain comfortable, with no major supply disruption reported and winter risk still viewed as episodic rather than structural. Peace discussions produced no breakthrough and Moscow signalled higher strike activity against energy and shipping targets. That headline risk slowed the decline but did not reverse it. LNG and pipeline cover remain adequate, so any intraday rebounds faded into the close.
Power followed gas. UK contracts drifted through the session, with the front week and month marking lower alongside NBP. Wind output is broadly in line with seasonal norms, leaving CCGT to flex mainly over the evening peak. Interconnectors continued to provide margin cover. With temperatures expected to run near or a little above average into mid-month, the prompt remains sensitive to hourly wind swings rather than sustained demand pressure.
Carbon was mixed by tenor. The 2026 UKA auction schedule will be cut from nearly 56 million to 51.9 million allowances, shifting the projected 2026 market balance to a 5.27 million tonne shortfall from 3.62 million previously. That change supports the back of the UK curve even as day-to-day trading stays range bound. EUAs were little changed on the day, offering only a modest floor to forward power.
Overall the tone is softer. Bearish NBP sentiment and benign fundamentals outweighed the latest geopolitical noise, while the UKA auction reduction adds support to longer-dated carbon and temper the downside in further-season power.