Energy Market Update – 03 June 2025
Energy markets rose on Monday, led by gains in natural gas and supported by tighter supply conditions and renewed geopolitical risks. Power prices moved in parallel, while oil and carbon also edged higher.
European gas prices climbed across the curve with the UK NBP day-ahead contract settling at 81.50 p/therm, up 2.35 p/therm, and the front-month TTF rising to €35.10/MWh. The uptick reflected a combination of short-term supply constraints and ongoing geopolitical uncertainty. Norwegian exports remained subdued due to planned maintenance, with 36 mcm offline, and further reductions expected as Troll maintenance begins later this week. UK gas system demand rose to 126.28 mcm, while gas for power demand eased to 14 mcm/day due to strong wind generation. However, concerns about reduced US LNG exports added upward pressure, particularly after Sabine Pass saw a 33% drop in feed gas flows from maintenance. LNG send-out from South Hook and Isle of Grain remained static at 5.1 mcm and 2.9 mcm respectively. EU gas storage levels stood at 48.32% of capacity (547.1 TWh), up from the previous month, with national storage levels ranging from 35% in Italy to 73% in Spain. A bearish factor limiting upside was weaker continental demand, with UK gas demand forecast well below seasonal norms at 130 mcm/day against an average of 155.3 mcm.
Power markets also rose, supported by gas price movements and a bullish geopolitical backdrop. The UK baseload day-ahead price fell significantly to £27.75/MWh, a technical correction following Friday’s volatility, but forward contracts gained across the curve. The front-month contract increased to £75.50/MWh and Q3-25 to £76.40/MWh. Germany’s July contract rose to €78.13/MWh and France’s to €40.86/MWh. Despite rising generation from wind this week, the ongoing tightening in gas supply remained the dominant influence on power. The UK’s wind output recovered from 5.6 GW to 8.9 GW compared to Friday, mitigating prompt volatility. On the generation side, UK nuclear outages persisted, notably at Heysham and Hartlepool, contributing to the firming of winter prices. Interconnector flows into the UK showed stable imports, particularly from France and the Netherlands, though peak capacities were constrained by cross-border maintenance. In the background, failed ceasefire talks between Russia and Ukraine added risk premium, reinforcing near-curve gains.
In other commodities, Brent crude edged up to $64.63/bbl, buoyed by a reduction in the US rig count despite OPEC’s decision to raise output. This marks a 1.14% day-on-day increase but remains well below last year’s level of $81.30/bbl. Carbon markets were mixed; EUAs for December 2025 rose slightly to €70.91/tonne while UK ETS certificates declined to £50.11/tonne. Coal prices saw modest increases, with the API2 2026 contract settling at $103.21/tonne. The rise in coal and carbon was attributed to persistent industrial activity and cautious sentiment ahead of expected heatwaves across parts of Europe, which could affect both power generation and demand patterns. Currency movements were neutral in influence, with GBP/EUR at 1.1857 and GBP/USD unchanged at 1.3283.