Energy Market Update – 16 July 2025
Gas and power prices showed mixed movements, with mild weather, stable supply, and improved LNG send-out softening gas prices, while rising demand and falling solar output supported short-term power values.
UK gas prices continued to decline on Tuesday, with NBP front-month contracts falling by up to 2.93p/therm, as increased LNG send-out and seasonal weather weighed on market sentiment. The day-ahead NBP price settled at 81.50p/therm, down 3.85p from the previous day, while the August contract dropped to 82.32p/therm. Prices across the forward curve also recorded modest losses. Norwegian pipeline flows were down, with Langeled delivering 40 mcm, a 9.6 mcm drop from the previous session. LNG send-out rose slightly, particularly from Isle of Grain, offsetting weaker UKCS production. Overall system demand increased to 154.6 mcm, up 13.6 mcm on the day, driven by a recovery in domestic demand and a dip in wind power forecasts. Despite this, future demand expectations remained subdued, especially with rising temperatures projected to limit gas-for-heating needs.
Power prices rose on the prompt, with the UK day-ahead baseload settling at £85.08/MWh, up £4.40, while the peak equivalent gained £6.53 to £83.86/MWh. These increases were driven by lower wind forecasts and a sharp drop in solar generation, which fell by 32% according to National Grid. Meanwhile, forward contracts softened, with August and September baseloads down by £1.60 and £1.25 respectively. UK generation remained dominated by gas-fired (CCGT) plants, with renewable output weakening. Interconnector flows from France and the Netherlands continued to support the grid, though recent price spreads narrowed. Nuclear outages persisted at key sites such as Hartlepool and Heysham, contributing to supply constraints. Forecasts suggest renewable generation could rebound later in the week, which may ease short-term supply concerns.
Crude oil prices retreated slightly, with Brent closing at $68.71/bbl, down $0.50 on the day, as traders weighed global economic sentiment against continuing geopolitical risks. Coal also dipped, with the ARA CIF Cal-26 contract falling to $112.74/tonne. However, European carbon markets firmed, with EUA December 2025 allowances rising by €1.09 to €71.51/tonne, while the UK ETS increased more sharply by £1.59 to £49.74/tonne. These gains followed renewed policy discussions on emissions limits and the role of carbon markets in achieving net zero goals. Currency markets were steady, with GBP/EUR at 1.1522 and GBP/USD flat at 1.3473.