Energy Market Update - 06 May 2025
Gas and power prices across Europe firmed on Friday amid colder weather forecasts and heightened geopolitical risk. Norwegian outages and tight LNG supply added to bullish sentiment.
UK and European gas contracts rose to end last week, driven by a pronounced shift in weather conditions. Forecasts now indicate below-average temperatures across key consuming regions, particularly Germany, reversing the previously mild trend. The NBP Front Month contract climbed to 80.15p/th from 77.25p, while TTF rose modestly to €32.93/MWh. Early trading this morning saw the TTF Front Month at €33/MWh and NBP holding at 80p/th, with the NBP Day-Ahead contract spiking to 79.40p/th. Contributing to this uptick was a 35mcm/day drop in Norwegian gas nominations to the UK, exacerbated by an unplanned 8mcm/day outage at the Dvalin field and continued planned maintenance at Vesterled. Meanwhile, LNG arrivals remain limited, with only two vessels expected in the UK over the next fortnight. Despite these pressures, European gas storage continues to build seasonally, now 41.16% full. However, with a 90% fill target still mandated by 1 November, the European Parliament’s upcoming vote on potential flexibility in storage obligations could influence forward price sentiment. Across the curve, UK winter 2025 gas prices gained 2.08p/th to 89.68p/th, with summer 2026 contracts up by 1.61p/th to 77.47p/th. European prices followed a similar trajectory, with TTF Winter 2025 closing at €34.39/MWh and Summer 2026 at €31.11/MWh.
UK power prices mirrored gas movements, as low renewable output and steady demand supported the market. The UK Baseload Day-Ahead contract closed at £83/MWh, up from £76/MWh, while the Front Month contract advanced to £74/MWh from £70/MWh. Seasonal contracts also strengthened, with Winter 2025 rising to £81.82/MWh. Wind output remains subdued, with speeds forecast to stay under 6 m/s this week, keeping Combined Cycle Gas Turbine (CCGT) generation at elevated levels. National Grid data indicated CCGT plants met approximately 26.6% of UK electricity demand on Friday. Nuclear availability is stable but still constrained by maintenance, and continental imports continue to flow, supported by competitive pricing from France and the Netherlands. German and Dutch day-ahead baseload prices stood at €90.96/MWh and €88.23/MWh, respectively, while French power remained lower at €13.59/MWh due to healthy hydro and solar contributions. In the wake of recent Spanish grid failures, EU nations are discussing large-scale infrastructure upgrades, highlighting a growing focus on energy system resilience.
Brent crude prices edged lower to $60.20/bbl, with downward pressure stemming from weakening OPEC+ cohesion. Over the weekend, six OPEC+ members announced intentions to abandon agreed production cuts, a move that introduces fresh oversupply risks. Saudi Arabia has signalled readiness to initiate a price war to maintain market influence. European carbon markets, meanwhile, saw substantial gains. EUA December 2025 contracts rose to €68.76/tCO2, while UK Allowances (UKAs) surged to a 10-month high of £49.63/tCO2. These increases come ahead of the UK-EU carbon market linkage summit on 19 May, where although no binding deal is expected, anticipation has boosted speculative activity. In LNG, Asian demand from China and South Korea continues to divert cargoes away from Europe. Spot LNG in Europe remained soft at $10.94/MMBtu, while JKM held steady at $11.26/MMBtu. In the US, Henry Hub climbed to $3.55/MMBtu on expectations of stronger domestic summer cooling demand. Coal prices rose slightly, with ARA CIF Cal-26 settling at $106.03/tonne.