Energy Market Update – 03 July 2025
Gas and power markets showed a mixed trend on Wednesday, with prompt natural gas prices slipping amid strong supply conditions, while power prices held firm due to low renewable generation and sustained cooling demand.
European gas prices edged lower as improved supply fundamentals outweighed modestly supportive weather conditions. The NBP front-month contract closed slightly down at 80.11p/therm, while the day-ahead price dropped to 78.60p/therm. On the continent, TTF spot prices also slipped to €32.77/MWh, reflecting easing supply concerns. Norwegian flows into the UK remained stable at 333 mcm/day, with UKCS production increasing slightly to 86.7 mcm/day. Meanwhile, system demand in the UK fell by over 20 mcm day-on-day to 139.12 mcm/day, easing pressure on the grid. Linepack levels moved into positive territory, supporting system balance. LNG sendout remained consistent at 8 mcm/day, with no major new deliveries expected imminently. However, a large volume of LNG is scheduled to arrive across Northwest Europe over the next week, with terminals at Gate, Zeebrugge, Wilhelmshaven, and Dunkirk expecting multiple cargoes from the US and Russia. Further downstream, expectations of increased wind power generation over the weekend are likely to suppress gas-for-power demand, which is forecast to fall to 11 mcm/day on the day-ahead, down 15 mcm from previous levels . German gas market developments also attracted attention, as Germany backed a new cross-border gas project with the Netherlands to tap North Sea reserves, potentially contributing up to 16% of the country’s annual consumption if realised.
Power prices remained supported despite slight day-ahead losses, with the UK baseload day-ahead contract falling to £76.46/MWh. Front-month and seasonal contracts moved higher, with August and Winter 25 baseload contracts settling at £73.40/MWh and £83.93/MWh respectively. The broader strength in forward prices was underpinned by below-average wind generation and elevated cooling demand, particularly in France, where high temperatures coincided with a period of constrained nuclear output. French nuclear availability remained volatile, with unplanned outages extended and multiple river-cooled reactors temporarily shut due to high river temperatures. Though six units have recently restarted, overall nuclear output just surpassed 40 GW. Solar power in France provided short-term relief but is expected to ease heading into the weekend. In the UK, wind output is forecast to strengthen into the weekend, which should ease market tightness. UK interconnector flows remained largely stable, though fluctuations in flows via the IFA and BritNed links were observed over recent days.
In broader commodity markets, Brent crude rose to $69.11/bbl, supported by concerns over renewed US tariffs and Iran’s suspension of cooperation with the UN nuclear watchdog. Nonetheless, increased OPEC+ supply continues to exert downward pressure, keeping the market direction uncertain. European carbon prices also rose, with the EUA December 2025 contract gaining €1.35 to settle at €71.93/tonne, supported by steady demand in the face of constrained nuclear generation and above-average power consumption. Meanwhile, coal prices moved higher, with the API2 Cal-26 contract up to $113.71/tonne, tracking bullish sentiment in the broader energy complex and expectations of seasonal demand from Asia and Europe amid ongoing tightness in LNG supply logistics.