Energy Market Update - 26 August 2025
Energy markets traded sideways this morning, with gas stabilising and power pushing slightly higher. Norwegian maintenance and low renewable generation remain the key drivers, while geopolitical risks persist.
European natural gas prices steadied today after last week’s recovery. Reduced Norwegian flows due to planned maintenance continue to support the market, with UK nominations down to 42 mcm/day as Langeled dropped 8 mcm/day and FLAGS by 2 mcm/day. Further capacity cuts are scheduled at Aasta Hansteen and Troll, suggesting supply constraints may deepen. At the same time, renewable output remains low across northwestern Europe, although UK wind forecasts have edged higher for the coming days. Gas-for-power demand for today is 29 mcm/day, down 7 mcm from yesterday, while weekend demand is forecast at just 19 mcm/day due to improved wind generation and higher imports. Germany’s largest storage site, Rehden, remains significantly behind target and looks increasingly unlikely to reach its mandated 45% fill level by 1 November, weighing on long-term security of supply. On the geopolitical front, tensions are again heightened after Ukraine struck Russian energy assets over the weekend, damaging a reactor at one of Russia’s largest nuclear plants and causing a fire at the Ust-Luga export terminal. The risk of further disruption has reduced expectations of a near-term peace agreement. On Friday, the TTF front-month contract settled at €33.77/MWh (from €33.18), while the NBP front-month closed at 83.67p/therm (from 82.47p). This morning, the TTF front-month is trading around €34/MWh, with NBP spot at 85p/therm.
Power markets strengthened in early trading, tracking higher gas prices and tight system fundamentals. The UK baseload day-ahead contract cleared at £84.25/MWh, up from £82.20, with the front-month contract at £78.07/MWh and Winter 2025 at £83.98/MWh. Forecasts show UK wind generation may briefly exceed 10GW this week, but output is expected to remain below seasonal norms through early September, keeping gas-fired generation demand elevated. Nuclear availability is improving, with capacity set to rise as planned maintenance concludes, which should help balance supply. However, constraints remain in continental Europe, where French nuclear production is vulnerable to ongoing maintenance and heat-related cooling limitations. UK system demand fell sharply to 103.9 mcm/day from 121.3 mcm/day yesterday, reflecting lower gas-for-power requirements alongside softer residential demand.
In wider commodity markets, Brent crude edged up to $67.73/bbl from $67.67, reflecting a cautious rebound after recent losses. European carbon prices slipped slightly, with EUA December 2025 contracts at €72.53/t (from €72.62), while UK ETS allowances rose modestly to £52.19/t (from £52.05). Coal prices eased, with ARA CIF Cal-2026 at $106.21/tonne, down from $107.52. LNG imports remain steady, with nominations at 8 mcm/day in the UK, mostly from South Hook. Several US-sourced cargoes are expected at northwest European terminals this week, though UK-bound arrivals are absent for now.