Energy Market Update - 08 May 2025
Energy markets initially rose on Wednesday but softened into the afternoon as prices failed to hold early gains. Concerns over EU gas policy, geopolitical tensions in South Asia, and fluctuating Norwegian gas flows contributed to a mixed trading session.
European natural gas prices opened firmer following early optimism driven by the European Commission’s draft plan to phase out Russian gas imports by 2027. The delayed release of this roadmap in early March had previously introduced uncertainty, with Slovakia and Hungary now formally opposing the plan, citing regional economic concerns. Market attention was also focused on unplanned maintenance at Norwegian facilities earlier in the week. With Troll and Kollsnes operations resuming, near-term bullishness eased due to ongoing flow limitations at Kollsnes. Norwegian nominations to the UK stood at 285mcm, up from 280mcm. EU gas storage levels reached 41.60% full, with a continuing trend of steady injections despite the storage level being significantly lower than last year. The UK NBP front-month contract slipped by 1.49p to 83.07p/therm, while TTF front-month prices eased to €34.53/MWh from €34.74. Spot prices stood at 82p for NBP and €34.41 for TTF, broadly reflecting market consolidation following recent volatility. LNG cargo arrivals to the UK have increased, with three vessels expected over the next two weeks, up from two previously. Meanwhile, LNG prices in Europe have now matched those in Asia, prompting some cargo redirection away from the continent.
UK power prices also declined across most contracts, mirroring movements in gas markets. The UK Baseload front-month settled at £76/MWh, down from £78, while the spot remained unchanged at £85/MWh. Power generation forecasts indicate limited wind generation through mid-May, sustaining reliance on gas-fired power (CCGT) and imports. Strong nuclear generation in France continues to support regional exports, with output reaching 27TWh in April—the highest April total since 2021. France’s net power exports rose 15% in the last month, reinforcing its position as a key summer exporter. However, UK nuclear availability remains affected by planned outages at major facilities, including Heysham, Torness, and Hartlepool, which may constrain domestic baseload capacity. This adds a slight bullish undertone to forward pricing, although liquidity constraints and milder weather are capping gains.
In broader commodity markets, Brent crude settled at $61.12/bbl, down from $62.15, reflecting bearish sentiment despite improved US-China trade talk prospects and weaker US production figures. European carbon markets strengthened, with EUAs (Dec 2025) rising to €71.06/tonne, up from €69, while UK Allowances (UKAs) surged to £51.60/tCO2—the highest level in 18 months—on expectations of enhanced price linkage between carbon markets. Coal prices remained subdued, with ARA CIF Cal-26 contracts closing at $106.78/tonne. In LNG markets, the JKM benchmark rose to $11.41/MMBtu from $11.32, while TTF-equivalent prices increased to $11.50/MMBtu, slightly narrowing the Europe-Asia price spread and influencing recent cargo routing decisions.