Energy Market Update – 15 May 2025
European gas and power markets eased slightly on Wednesday, with caution around stalled Ukraine peace talks and bearish macroeconomic signals weighing on sentiment.
Gas prices across the NBP curve softened modestly, with the Winter 25 contract ending 1.15p lower at 93.99p/th and the Day-Ahead closing marginally higher at 79.00p/th. The market remained largely balanced despite an unplanned outage at Norway’s Kårstø facility cutting capacity by 11.6mcm/day. Norwegian flows held steady at 316.5mcm/day, supported by rising UKCS production, which increased to 87.6mcm. LNG send-out was stable, albeit subdued, with only two cargoes due in the next two weeks. European gas storage levels rose to 43.43% as mild weather reduced demand, particularly in Northwest Europe where UK system demand was 148.6mcm — 20mcm below seasonal norms. Traders are also preparing for Norwegian maintenance beginning 21 May, expected to reduce capacity by up to 169.57mcm/day, though the market has partially factored this in. TTF front-month pricing was flat in early Thursday trading at €35.05/MWh. In the global LNG space, stronger Asian demand is tightening the market, but rising Chinese output and Siberian gas flows continue to cap Pacific basin prices.
UK power markets mirrored gas trends, with small declines along the curve. The Day-Ahead baseload settled at £78.80/MWh, down £0.20/MWh, while the June and Winter 25 contracts fell to £75.00/MWh and £84.05/MWh respectively. These movements were underpinned by improved nuclear availability and falling gas-for-power demand. Renewables, led by wind and solar, contributed 37.2% of UK generation, reducing reliance on CCGT plants, which made up just 17.5% of the mix. Interconnector flows from France and the Netherlands supported domestic supply, but tightening Norwegian gas supply could shift spreads and impact exports next week. Ongoing outages at Hartlepool and Heysham continue to limit nuclear output, though Torness 1 is expected back online shortly. Forecasts for wind remain moderate, while strong solar generation persists. However, weak industrial demand and declining UK carbon prices, with UKAs falling £2.31 to £49.44/tCO2, are dampening forward power prices. This divergence from EUAs, which settled at €72.33, reflects broader market uncertainty ahead of the upcoming Carbon Summit.
Brent crude declined to $66.09/bbl amid surprise inventory builds in the U.S. and speculation around reduced Middle East sanctions following President Trump’s Gulf visits. Discussions on potential easing of Syrian sanctions further added to the bearish outlook. In the U.S., Henry Hub gas slipped slightly to $3.49/MMBtu. Meanwhile, Asian LNG prices remained subdued, with June JKM contracts at $12.02/MMBtu, and the TTF-equivalent LNG price at $11.52/MMBtu, narrowing the UK–Asia arbitrage window. This tightening spread comes as Asia’s summer demand increases, but ample regional supplies hold prices in check. Coal prices also softened, with CIF ARA contracts falling to $102.28/tonne, echoing the wider pullback across energy commodities. The Brent futures curve entered contango from July, pointing to soft short-term demand but steady medium-term supply expectations.