Energy Market Update – 04 July 2025
Energy markets showed mild upward movement across the board, driven by tightening balances from a drop in injections into European gas storage, strong LNG activity, and near-term weather forecasts indicating potential heat-driven demand increases.
Natural gas prices nudged higher on Friday morning, with the TTF front-month trading at €33.73/MWh and the NBP equivalent at 80.50 p/th. This came after a relatively steady session on Thursday where front-month European contracts ended slightly higher, despite intraday sell-offs following an early peak. Gas fundamentals remain soft overall, but markets are watching closely for signs of increased demand, with a heatwave anticipated towards the end of next week potentially lifting cooling-related consumption. UK gas system balance has improved due to the full return of the Easington terminal and a rebound in wind generation, creating a system length of 12 mcm. On the continent, Germany’s Wilhelmshaven LNG terminal has filled all available regasification slots amid strong demand, helping to support EU storage levels which now stand at 59.44%. LNG supply remains robust, with 15 deliveries over the past week and 10 more expected in the coming days. Norwegian gas flows continue to be strong, reinforcing a stable near-term supply outlook .
Power markets traded within a tight range, although UK baseload day-ahead prices dipped sharply to £61.92/MWh from £76.46 the day before. Despite this drop, forward prices were largely steady, with August and Q4 baseload contracts closing at £73.00/MWh and £82.73/MWh respectively. Increased wind generation in the UK has reduced gas-for-power demand, applying downward pressure. Forecasts indicate that while wind output will hold firm into early next week, it is expected to fall below seasonal norms from mid-week, with solar generation compensating slightly. In France, EDF announced that its Flamanville-3 reactor is expected to reach full power by the end of summer, despite an extended outage, which supports long-term nuclear availability. Meanwhile, the German government is maintaining tax relief for heavy industry in light of recent energy price pressures, following weaker industrial demand and falling wholesale contracts such as the German August baseload, which reached a new low at €80.29/MWh.
In broader commodities, Brent crude prices eased slightly to $68.80/bbl as markets assessed potential implications of trade policy shifts and marginally higher inventories. Prices remain rangebound between $67 and $69 per barrel. European coal benchmarks also softened, with the ARA CIF Cal-26 contract down to $112.73/tonne. In the carbon market, EU Allowance (EUA) prices rose modestly, with the December 2025 contract settling at €72.06/tonne. The UK ETS contract also edged higher to £48.50/tonne, reflecting expectations of stronger demand as industrial activity stabilises and temperatures climb across the region.