Energy Market Update – 23 May 2025
European energy markets edged slightly lower on Thursday as Norwegian gas flows recovered and LNG send-out remained stable. Despite ongoing geopolitical uncertainties, including EU discussions on further Russian sanctions, these factors failed to generate substantial risk premiums.
Natural gas markets in Europe remained broadly stable, with minor losses observed in the front-month contracts. The UK’s NBP Front Month settled at 86.81p/therm, down just over 1p, while the TTF equivalent closed at €36.36/MWh. Spot prices were little changed this morning, with NBP at 87p/therm and TTF steady at €36/MWh. The UK gas system began Friday with moderate demand at 146.6mcm, supported by an increase in Langeled pipeline flows to 25.7mcm/day, while Vesterled remains offline due to an unplanned outage. UKCS production was steady at 91mcm and LNG send-out stayed low at 14mcm/day, with Dragon LNG still inactive. However, signs of incoming LNG supply are emerging, with three cargoes expected over the next two weeks. EU gas storage levels reached 45.27% fullness, continuing their seasonal build. In Asia, growing demand for summer cooling has started to lift LNG spot interest, potentially tightening supply to Europe. Despite this, forward contracts have shown little movement, with Winter 2025 pricing at 96p/therm for NBP and €38/MWh for TTF.
UK power markets followed gas lower, with the Front Month contract slipping to £79/MWh and the Front Season to £88/MWh. Day-Ahead baseload prices rose marginally to £88.58/MWh. The trend reflects falling wholesale gas prices alongside recovering wind generation forecasts over the upcoming bank holiday. Wind output is expected to climb from Friday through early next week, briefly easing gas-for-power demand. Meanwhile, solar generation could dip amid forecasted cloud cover. UK nuclear availability remains constrained due to ongoing maintenance at Heysham and Hartlepool, although Torness 1 has returned to service. Interconnectors continue to import power, particularly from France and the Netherlands, where cheaper generation and subdued local demand are encouraging exports. France benefits from strong hydro and nuclear availability despite some planned outages. Carbon prices remain under pressure, with EUA December 2025 allowances falling to €72.15/tCO2 and UKAs at £52.95/tCO2. Weaker industrial outlooks and macroeconomic concerns are limiting gains in emissions markets.
Crude oil saw a modest uptick, with Brent closing at $64.44/bbl. The gain was driven by short-term supply dynamics, while demand growth remained tepid. OPEC+ members reaffirmed production targets and resisted calls for cuts despite recent price softness, signalling confidence in market balance. In LNG, the JKM benchmark held steady at $12.48/MMBtu, while European spot LNG prices fell slightly to $12.03/MMBtu on weak regional demand. Henry Hub prices declined to $3.00/MMBtu, reflecting mild U.S. weather and ample storage. Coal prices continued their gradual rise, with ARA CIF Cal2026 ticking up to $105.64/tonne on restocking demand in Europe and Asia. However, the UK’s market impact is limited following the closure of its last coal plant in April. Currency movements may temper import inflation, with Sterling strengthening to 1.1891 against the euro and 1.3497 against the dollar, buoyed by resilient UK economic data and reduced expectations of a Bank of England rate cut.