Energy Market Update – 06 June 2025
Markets posted modest gains yesterday with gas contracts leading, primarily driven by continued supply constraints from Norway and forecast reductions in wind output over the coming fortnight.
Natural gas prices strengthened as Norwegian pipeline flows remained suppressed, with nominations reported at just 262mcm/day on 5 June, reflecting the impact of ongoing maintenance at key facilities such as Troll and Kollsnes. Despite a small increase to 273mcm on 6 June as some sites returned to service, the general outlook remains tight. Norwegian supply reductions were coupled with steady LNG send-out from UK terminals (8mcm/day), though only two cargoes are expected to dock in British ports this month, on 14 and 26 June. This limited import activity comes as Centrica renewed a 10-year deal with Equinor worth over £20 billion, covering around 10% of the UK’s annual demand. On pricing, the TTF front-month rose to €36.39/MWh, up from €35.65, and the NBP front-month increased to 85.42p/therm from 83.36p. In this morning’s trading, the TTF front-month was seen at €37/MWh, reflecting persistent supply-side pressure.
The power market tracked the firmer gas trend, with UK baseload contracts climbing. The UK front-month baseload contract settled at £77/MWh, up from £75, while the front-season gained to £86/MWh. Expectations of higher short-term wind generation are providing temporary relief, with forecasts above seasonal norms for this week and next. However, conditions are set to reverse with a sharp drop expected in the week beginning 16 June, potentially falling over 20% below the seasonal average. This shift, combined with low solar output and interconnector maintenance limiting imports via the North Sea Link (NSL), may drive increased reliance on gas-fired generation. German wind output is also projected below average from 9 June onwards, further strengthening CCGT demand across the continent. Meanwhile, nuclear availability in the UK remains reduced, with outages removing approximately 0.7GW from the grid, adding to upward pressure on prices.
Across the broader commodity landscape, sentiment in energy markets was lifted by signs of improving US-China relations following remarks from the Chinese vice president promoting cooperation. Brent crude held steady at $65.34/bbl, reflecting limited movement despite geopolitical signals. EUA carbon credits for December 2025 edged up to €73, bolstered by a mildly optimistic demand outlook and ongoing storage replenishment efforts in Europe, where reserves currently sit at 49.88% full. Coal markets were marginally stronger with ARA CIF Cal-26 contracts at $105.15/tonne, up $0.86 on the day. Asian LNG prices (JKM) also saw a slight rise to $12.42/MMBtu, while Henry Hub dipped slightly to $3.68/MMBtu. These trends collectively illustrate a cautious but steady recovery in global energy benchmarks.