Energy Market Update – 17 June 2025
Energy markets saw mixed movements on Monday, with European gas prices easing despite escalating conflict in the Middle East. Power markets were generally stable to slightly higher, while crude oil and carbon markets edged lower on the day.
Natural gas prices across Europe softened on Monday, largely due to improving supply fundamentals, despite heightened geopolitical tensions. While continued aerial exchanges between Israel and Iran raised concerns about regional energy security, the market focus turned to near-term fundamentals. Norwegian flows provided some reassurance, with the Kollsness processing plant returning from maintenance. Although other unplanned outages, including at Gullfaks, persist, total planned maintenance is expected to wind down significantly by early July. This signalled an upcoming recovery in supply. UK NBP front-month contracts fell by 2.6 p/th to settle at 89.08 p/th before recovering to 91.55 p/th in early trading today, while the TTF front-month dropped slightly to €38.93/MWh. European storage levels remain healthy, tracking closely to 2022 levels, with a 2% week-on-week increase to 53.76% full. Meanwhile, LNG send-out declined due to fewer vessels arriving in Northwest Europe, although scheduled deliveries remain steady, particularly from the United States. Asian LNG demand has begun to pick up seasonally, yet overall global demand remains relatively muted, applying downward pressure to European prices.
UK power markets showed modest gains, supported by bullish sentiment in gas markets and increased cooling demand from the ongoing ‘Spanish plume’ heatwave across Europe. The UK baseload day-ahead price closed at £83.51/MWh, up £9.64/MWh day-on-day. Forward contracts moved moderately, with the July-25 baseload contract at £80.75/MWh and Winter-25 at £91.48/MWh. Uncertainty persists around nuclear availability in France, where stress corrosion at Civaux-2 continues to raise questions, although no further outages at N4 reactors are currently planned. Solar output has been strong, with France recording a new peak of 18.73 GW. However, reduced wind output in France and the Netherlands has heightened gas-for-power demand in those regions, offsetting some of the benefit of solar gains. The European Investment Bank has announced €1.6 billion in funding for the Spain–France interconnector, aiming to improve long-term grid resilience following recent disruptions.
Crude oil markets remained volatile amid Middle East tensions. Brent crude settled at $73.23/bbl, down $1 from the previous session. The conflict’s impact on the Strait of Hormuz, a critical chokepoint for global energy shipments, continues to drive market nervousness. Japanese shipping operator Mitsui O.S.K Lines has reportedly begun exploring risk mitigation strategies for Persian Gulf routes. Meanwhile, European carbon prices declined, with EUA Dec-25 contracts slipping to €75.34/tonne and UK ETS Dec-25 to £53.86/tonne, reflecting limited immediate compliance demand. Coal prices, in contrast, edged up slightly, with the API2 Cal-26 contract rising to $108.98/tonne, supported by moderate restocking demand across Europe.