Energy Market Update – 05 June 2025
Energy markets traded largely flat on Wednesday, with initial gains reversed later in the day amid developments in Russian gas transit and growing geopolitical uncertainty. Weaker flows from Norway and lower renewable forecasts supported early prices, but relief around Eastern European supply capped upside.
Natural gas markets opened the session on firmer ground but closed largely unchanged. The NBP Front Month settled slightly lower at 83.36p/th, while TTF Front Month closed at €35.65/MWh. The UK spot price climbed to 86p/th, suggesting short-term tightness, though fundamentals remained stable. Norwegian exports via Langeled dropped to 20 mcm/d due to intensified maintenance at Troll and Kollsnes, while Vesterled flows stayed inactive. However, domestic UK production offset much of the shortfall, rising by over 8 mcm. System linepack also increased by nearly 9 mcm, signalling comfortable supply levels despite reduced imports. Meanwhile, EU gas storage climbed to 49.55% full, approaching the halfway mark but still behind last year. Of note, Ukraine’s storage remains critically low at 7%. Hungary confirmed backhaul transit of Russian gas into Ukraine, marking the first such flow since the expiry of the formal transit deal. On the curve, Winter 25 NBP edged down to 94.30p/th, with TTF settling at €36.99/MWh. Norwegian maintenance is expected to peak mid-June, limiting flows by up to 97.5 mcm/d, although healthy injection rates across the EU continue to mitigate tightness.
UK power prices rose sharply on the prompt, with Day-Ahead baseload jumping by nearly £19 to £74.99/MWh. Lower renewable generation and steady thermal demand supported the increase, though the forward curve was more stable, with the Front Month at £75/MWh and Front Season at £85/MWh. Wind output is forecast to dip below seasonal norms in the coming week, averaging just 2.9 GW versus a prior 3.7 GW. Gas-for-power demand held steady, reflecting its role in filling the renewable gap, while solar generation dipped after a strong May, with recovery unlikely before next week. Interconnector flows from France and the Netherlands continued to supplement UK supply effectively, helped by low French prices supported by strong hydro generation. Nuclear availability remained stable, with only minor outages at Hartlepool and Heysham. Carbon markets were broadly flat, with EUA at €72.61/t and UKA at £50.30/t, placing slight downward pressure on longer-term contracts.
In other commodities, Brent crude fell to $64.86/bbl as soft macroeconomic signals and slow progress in US-Iran negotiations weighed on sentiment. Despite a decline in US inventories, demand concerns and geopolitical ambiguity prevailed. The Trump administration’s comments blaming Tehran for stalling negotiations added to uncertainty. LNG pricing continued to soften, with JKM at $12.30/MMBtu and Northwest Europe spot at $11.44/MMBtu, amid weak Asian demand and scaled-back import schedules. US Henry Hub remained flat at $3.72/MMBtu. Coal prices showed marginal strength, with API2 Cal-26 rising to $104.29/tonne, driven more by broader commodity market sentiment than European coal fundamentals, which remain on a structural decline.