Energy Market Update – 22 May 2025
European energy markets retreated slightly following recent gains, with gas and power prices easing amid improved Norwegian flows and the unwinding of geopolitical concerns.
Natural gas prices across Europe declined as supply conditions improved. The return of key Norwegian facilities, notably Troll and Kollsnes, helped stabilise flows into the continent and the UK. Exit nominations rose by 67 mcm/day to 242.3 mcm/day, contributing to a downward correction in prices. This was evident in the UK NBP front-month contract, which traded at 87.58 p/therm, down from previous highs . At the spot level, the NBP settled at 89.25 p/therm while the TTF closed at €36.78/MWh. Additionally, LNG supply conditions were stable, with multiple arrivals into Northwest Europe including shipments from the US, Algeria, and Qatar, further easing supply tightness. Freeport LNG in the US resumed operations at its Phase 3 facility, offering reassurance about medium-term supply availability. However, interconnector flows out of the UK remained negative, with -24.7 mcm/d via IUK to Belgium and -13.3 mcm/d through BBL to the Netherlands, slightly limiting domestic availability. UKCS production dipped to 89.5 mcm/d, down from 99.7 mcm/d, while linepack drew down slightly. EU gas storage levels remained moderate, with the bloc averaging around 50% full, but UK sites showed wide variation from 7% to 90% depending on facility.
UK power prices followed gas markets lower. The day-ahead baseload price settled at £85.11/MWh, though it remained up 0.79 from the previous session, driven in part by a late-day upward revision to short-term demand expectations. Cooler temperatures are supporting demand, but stronger renewable forecasts are tempering bullish sentiment. UK wind and solar generation are forecasted to exceed seasonal norms later in the week, potentially softening demand for gas-fired generation. French nuclear availability has dropped to 63% due to planned outages, putting upward pressure on French power prices. There were also calls from Spain and Portugal to increase interconnection capacity with France following regional blackouts, though France indicated that EU funding would be necessary to support such infrastructure projects . In the UK, nuclear outages continued with key units such as Hartlepool and Heysham undergoing planned maintenance, removing several hundred megawatts from the grid. Despite this, the UK system remained balanced, aided by higher flows through Langeled and steady LNG send-outs.
In other commodities, oil prices dropped sharply. Brent crude fell by over $2/bbl to trade at $64.91/bbl as markets reacted to rising US crude inventories and speculation that OPEC+ may increase production quotas in July. Carbon markets also edged down, with EUA Dec 2025 allowances falling to €72.74/tonne. Similarly, UK ETS prices declined to £54.82/tonne, tracking lower energy demand expectations and strong renewable output. Coal prices softened marginally as well, with the ARA CIF Cal 2026 contract at $105.61/tonne, reflecting both bearish sentiment in the power markets and improving supply dynamics.