Energy Market Update - 09 May 2025
Energy prices rebounded Thursday, buoyed by EU storage policy revisions, a UK-US trade deal, and persistent geopolitical tensions, notably in Ukraine, which sustained the market risk premium.
Gas prices moved higher across European benchmarks, with geopolitical concerns and regulatory adjustments at the heart of market sentiment. In the UK, the NBP Day-Ahead price edged up to 82.65p/th, while the Front Month contract rose to 84.80p/th. On the continent, the TTF Front Month settled at €35.34/MWh, climbing to €36 in early Friday trade. Despite lower UK system demand at 157.3 mcm, owing to warm weather forecasts, higher Norwegian flows, notably through Langeled, provided a supply-side offset. LNG send-out held steady near 10 mcm/day, with three cargoes confirmed for the coming fortnight. EU storage levels climbed modestly to 41.84%, still trailing the five-year average. In a key regulatory shift, the EU reduced its mandatory storage target to 83% by 1 December and added flexibility clauses, which markets interpreted as a sign of pragmatic risk management. Meanwhile, expectations of rising US LNG exports and potential reintroduction of Russian gas under a future Ukraine peace accord add complexity to forward market outlooks. The JKM price rose to $11.95/MMBtu, with equivalent TTF-based spot LNG at $11.70/MMBtu, signalling a tentative recovery in Asian demand.
Power markets in the UK followed the gas market’s direction, with Day-Ahead baseload closing at £83.80/MWh. Forward contracts also advanced: Summer 2025 moved to £76.90/MWh and Winter 2025 to £85.56/MWh. Low wind output and steady CCGT dispatch supported these gains, although nuclear availability is set to rise as Torness 1 returns to service and other outages conclude. Across Europe, high temperatures are expected to suppress short-term demand. In France, Germany, and the Netherlands, spot prices remained largely stable, underpinned by strong renewable generation. In a supportive regulatory development, France’s CRE approved measures to expedite grid connections for large industrial consumers, boosting electrification potential. UK power imports remained robust, assisted by lower prices on the continent driven by strong French nuclear performance. Carbon prices had minimal impact, with UK Allowances (UKA) trading at £51.77/tCO2 and EU Allowances (EUA) at €70.72/tCO2.
In broader commodity markets, Brent crude rose to $62.84/bbl, supported by disciplined OPEC+ output and optimism ahead of US-China trade talks. This strength underpinned general commodity sentiment. Coal prices remained elevated, with the API2 Cal26 benchmark at $105.98/tonne. Carbon markets saw limited declines, with softening speculative interest reflecting macroeconomic caution. In the US, Henry Hub prices slipped to $3.59/MMBtu from $3.62, amid mixed fundamentals and a subdued weather-driven demand outlook.