Energy Market Update – 21 July 2025
Energy markets eased as gas prices fell following the resolution of Norwegian supply issues. Power prices mirrored this movement, with ongoing reliance on gas-fired generation. Oil, carbon, and coal also retreated slightly.
NBP gas prices declined into the end of last week, driven by the restoration of Norwegian flows following outages at the Kolnes and Nyhamna processing facilities. UK pipeline imports from Norway rose sharply to 46.8 mcm on Friday from 19 mcm the day before, alleviating near-term supply concerns. However, UK storage levels remain tight, with volumes at just over 8 GWh - significantly below last year’s 19.3 GWh for the same date. Spot prices at the NBP fell 5.1% to 81.30p/therm on Friday, reflecting improved supply conditions. Continental hubs followed a similar path, with TTF settling at €83.51/MWh and PSV at €96.15/MWh. A combination of increased interconnector flows and subdued LNG sendout - recorded at just 9 mcm/day - contributed to stable UK system demand, which climbed to 172.59 mcm. While LNG arrivals are expected to rise with cargoes due at Isle of Grain, medium-range storage injections continue. Meanwhile, European storage facilities maintain healthy levels, with Germany and Italy both exceeding 75%, though UK sites remain under pressure. Looking ahead, the conclusion of Troll maintenance and new planned outages at Karsto are expected to influence flows further into August.
Power markets in the UK softened in line with falling gas prices, although structural tightness in the system limited further declines. The front-month baseload contract dropped to £72.35/MWh, down £1.20, while the day-ahead price closed at £83.72/MWh. Gas-fired generation (CCGT) remains dominant, supported by low wind and solar output. Over the past 15 days, CCGT contributed the largest share of supply, with renewables consistently underperforming. Interconnector flows continued to support system balance, particularly from France and the Netherlands. Despite the dip in prices, the outlook for power remains tight, with forecasted renewable generation remaining below seasonal norms over the next week. UK nuclear capacity is also limited by both planned and unplanned outages, notably at Hartlepool, Heysham, and Torness, contributing to generation strain. Market imbalance and system price data suggest elevated buy prices during peak demand periods, reaching £124/MWh on 18 July.
In broader commodities, Brent crude edged lower to $69.28/bbl, driven by mixed geopolitical signals and slower global demand expectations. Carbon markets also softened, with EUA December 2025 prices falling €0.66 to €69.89/tonne, and the UK ETS down £1.77 to £49.21/tonne. The decline followed general bearish sentiment across the wider energy complex. Meanwhile, coal prices retreated slightly, with the ARA CIF Cal-2026 contract down to $110.03/tonne, a $1.33 drop from the prior session. LNG prices also came under pressure amid weak demand in Asia, with JKM month-ahead dropping $0.18 to $12/MMBtu. However, European LNG import activity remains strong, with new cargoes arriving across terminals in Belgium, the Netherlands, France, and the UK. The influx is expected to support storage levels in the coming weeks, assuming steady injection rates and mild weather conditions.