Energy Market Update – 24 June 2025
Markets fell sharply at the start of the week, driven by surging Norwegian gas exports and signs of de-escalation in the Middle East, with ceasefire talks temporarily calming geopolitical fears.
Natural gas prices resumed their downward trend on Monday, led by improved flows from Norway. Langeled pipeline nominations more than doubled to 49.3mcm/day following the conclusion of maintenance work and expanded capacity at Oseberg. Overall, Norwegian exports rose to 307mcm/day, the highest since mid-May. Despite an overnight missile strike by Iran on a US base in Qatar, markets were reassured by the subsequent announcement of a ceasefire agreement between Israel and Iran. This helped ease fears of a broader disruption to supply through the Strait of Hormuz, though traders remain wary of potential violations to the fragile agreement. UK system demand rose to 140.86mcm/day from 130.14mcm the previous day, driven by warmer temperatures, while LNG send-outs remained stable. The NBP front-month contract closed Monday at 98.75p/therm, down from 109.00p, and early Tuesday trade saw further declines to 85.20p/therm, an 11% drop in one session.
Power prices tracked the gas market lower, with weak gas-fired generation and strong renewables pushing down baseload prices. On Monday, gas-fired (CCGT) output fell to just 11.3% of the UK generation mix, down from 22.1% on Friday, while renewables met 61.8% of demand. Lower temperatures across Europe, following the end of the ‘Spanish plume’ heatwave, reduced air conditioning demand and added further bearish sentiment. The UK baseload day-ahead price dropped significantly to £49.20/MWh, with the front-month falling to £81.70/MWh from £87.00. A planned extension of maintenance on the IFA interconnector also constrained UK-French electricity imports, adding potential upside risk later in the week. Meanwhile, EDF flagged possible nuclear output reductions at Rhone River plants due to high river temperatures, though these did not translate into bullish movement in French contracts, which declined amid wider bearish pressure.
In other commodities, Brent crude prices slipped to $71.48/bbl amid easing tensions in the Gulf, down from $77.01 the previous session. The potential reopening of oil routes and reduced risk of escalation have helped to suppress prices. Carbon markets were mixed, with EUA December 2025 prices edging higher to €73.27/tonne, while the UK ETS fell marginally to £50.79/tonne. European coal prices rose slightly, with the ARA CIF Cal-26 contract increasing to $113.06/tonne, reflecting stronger Asian demand and limited near-term supply flexibility.