Energy Market Update – 16 May 2025
Energy markets moved sideways on Thursday, with limited price action as geopolitical uncertainty overshadowed fundamentals. President Putin’s absence from Ukraine peace talks stalled recent optimism, while Trump’s remarks further dampened hopes of imminent progress.
Natural gas markets were largely steady, with the TTF and NBP front-month contracts closing at €35/MWh and 84p/therm, respectively. Early week gains driven by Norwegian maintenance faded by Friday, as disruptions at the Troll and Aasta Hansteen fields proved temporary. UK gas nominations, which had dropped sharply during the outages, began to normalise as domestic production rose to 94.5mcm/day and Langeled flows recovered to 47.2mcm/day. LNG sendout remained stable at around 19mcm/day, with two additional tankers expected in the coming week. Despite short-term disruptions, overall system supply was healthy, aided by mild weather and consistent production. EU gas storage climbed to 43.67%, though Germany and the Netherlands continue to lag behind the European average, which may maintain storage demand in coming months. Forward pricing saw modest strength, with NBP Winter 2025 up to 94.40p/therm and Summer 2026 nudging to 81.63p/therm. Globally, U.S. Henry Hub dipped to $3.36/MMBtu, while Asian JKM spot prices fell to $11.88/MMBtu, indicating continued softness in LNG demand.
In the power market, UK prompt prices declined, with the Day-Ahead baseload closing at £75.27/MWh, driven by lower demand and high solar output. Conversely, June baseload rose to £75.50/MWh and Winter 2025 climbed to £84.35/MWh on expectations of increased gas-for-power usage due to subdued wind generation. Wind output is forecast to remain near seasonal averages through next week, with a potential increase into late May. Solar generation remains well above seasonal norms, helping to moderate thermal demand. UK interconnector exports remained low, particularly through the IUK and BBL pipelines, reflecting limited continental premium. Domestic nuclear generation remains constrained by ongoing outages at Heysham and Hartlepool, though the return of Torness 1 has improved stability. French baseload prices remain below UK levels, supporting continued imports via the IFA and Nemo links. Carbon markets diverged, with EUAs rising above €73/tCO2, while UKAs slipped below £49, reflecting broader investor sentiment rather than emissions fundamentals.
Among other commodities, Brent crude declined to $64.53/bbl amid soft U.S. inventory data and improved sentiment around U.S.–Iran relations. The market remains in backwardation, though near-term prices have dipped from earlier May levels. U.S. WTI followed a similar trend, settling at $61.14/bbl. Carbon prices rebounded slightly, with EUA December 2025 rising to €73.41/t, up 1.08 €/t, while the UK ETS continued to weaken at £48.66/t. These movements point to speculative positioning and macroeconomic uncertainty, particularly concerning UK industrial output. Coal prices firmed modestly, with ARA CIF Cal-26 closing at $103.30/tonne, supported by persistent low hydro availability and steady cooling demand across Europe.