Energy Market Update – 13 May 2025
European gas and power markets opened the week with firm gains, buoyed by easing geopolitical tensions and a temporary détente in global trade hostilities. Monday’s announcement of a 90-day mutual tariff reduction between the United States and China provided a significant sentiment lift, particularly as both nations had previously levied tariffs exceeding 100% on key imports.
Natural gas prices rose across the forward curve on Monday, led by strength in near-term contracts. The UK NBP Day-Ahead price climbed to 81.50p/therm, while the TTF Day-Ahead settled at €35.37/MWh. Forward contracts also moved higher, with the NBP June-25 front month trading at 84.60p/therm and the Winter 2025 contract reaching 94.40p/therm. These gains were largely driven by macroeconomic optimism following the US-China tariff easing, which is expected to reinvigorate global industrial demand, particularly from Asia. Norwegian supply remained a key constraint, with flows via Langeled at just 48 mcm/day and aggregate NCS exports down to 309 mcm/day. UKCS output declined to 85.10 mcm/day. Despite mild weather keeping UK gas demand below seasonal norms—forecasted at 161 mcm/day versus 176.5 mcm—tightness in LNG arrivals and steady injection demand lent support to the market. LNG send-out from UK terminals was subdued at 24 mcm/day, and only one UK-bound tanker is confirmed this week, despite over ten cargoes arriving across Europe. EU storage continued to fill steadily, now 42.5% full, with German concerns persisting due to high tariffs at the Rehden facility.
Power prices followed gas higher. The UK Day-Ahead baseload contract settled at £80.80/MWh. The June-25 contract climbed to £76.35/MWh, and Winter 2025 rose to £85.58/MWh. Gains were underpinned by the stronger gas complex and rising carbon costs. EUA Dec-25 prices surged over €3 to €73.41/tonne, reflecting market optimism tied to economic recovery and stricter EU decarbonisation goals. Solar generation was robust across north-west Europe, particularly in the UK, France, and Germany, helping to moderate peak demand, although variable wind output continues to leave the system reliant on Combined Cycle Gas Turbines (CCGTs) for stability. Wind generation rebounded to 6.8GW on Monday but is expected to fall below seasonal norms midweek. Negative hourly power prices were recorded in France over the weekend due to high renewable penetration and low demand. EDF’s ongoing maintenance at key nuclear facilities, including Hartlepool and Heysham, has had minimal near-term impact on supply security.
Other commodities also reacted to improved macroeconomic sentiment. Brent crude rose to $64.96/bbl, up $1.05 on the day, supported by expectations of stronger global demand as US diplomatic efforts continue in the Middle East. WTI traded at $61.86/bbl. Coal prices remained firm, with ARA CIF Cal-26 contracts settling at $105.54/tonne, driven by reduced Russian exports and strong Asian procurement. In LNG, the JKM benchmark held steady at $11.72/MMBtu, while TTF-linked spot LNG in North-West Europe edged up to $11.53/MMBtu, reflecting the tightening supply landscape amid the trade détente and low UK terminal send-outs.