Energy Market Update – 04 August 2025
Energy prices fell on Monday as strong renewables output and bearish commodity sentiment weighed on the market. Gas and power contracts declined amid healthy supply, while oil and carbon extended losses.
UK natural gas prices moved lower across most forward contracts. The NBP September contract slipped to 83.35p/therm, while Winter-25 fell to 91.70p/therm, down from 94.20p on Friday. Steady flows from Norway and subdued LNG activity maintained a well-supplied system, which opened 17mcm long. UK system demand reached 150mcm, around 5mcm above seasonal norms, supported by medium-range storage injections of 41mcm. Norwegian flows through the Langeled pipeline approached capacity at 71mcm/day, offsetting the limited LNG sendout. Market participants remained alert to geopolitical risks, including the expiry of a US deadline for Russian sanctions later this week, which may trigger further volatility. Meanwhile, LNG supply to Northwest Europe remains robust, with further deliveries scheduled from Russia, the US, Malaysia, and Peru throughout the week.
UK power prices mirrored gas declines. The baseload Day-Ahead contract dropped to £79.15/MWh, with September delivery slightly down to £79.00/MWh and Winter-25 trading at £84.99/MWh. A surge in wind output, which accounted for 43% of the UK’s generation mix, significantly reduced gas-for-power demand to just 5mcm. The arrival of Storm Floris was a key driver of stronger wind generation. Imports remained steady via interconnectors, and nuclear availability was largely unchanged. Continental European power markets showed a mixed picture, with German baseload contracts softening and French prices strengthening slightly. German September power traded at €90.01/MWh, while France saw its equivalent at €58.24/MWh. Overall, bearish sentiment prevailed, driven by recent tariff announcements from the US, which dampened broader commodity prices.
Crude oil extended its losses following OPEC’s decision to raise production again for September. Brent crude fell to $69.67/bbl and WTI to $67.33/bbl. This marks the sixth consecutive month of output increases, adding pressure on prices. In the carbon market, EU ETS allowances weakened further, with the EUA December 2025 contract falling to €71.04/tonne, while the UK ETS equivalent slipped to £57.64/tonne. Coal prices also declined slightly, with the ARA CIF Cal-26 contract at $111.95/tonne. In wider market news, a major hydrocarbon discovery was announced offshore Brazil, which could eventually add to global oil and gas supply depending on field viability assessments.