Energy Market Update – 26 June 2025
Energy markets softened across the board, with natural gas and power contracts falling further amid sustained geopolitical calm and improving supply fundamentals. Oil and carbon prices also weakened.
Natural gas prices continued to decline following confirmation that the ceasefire between Israel and Iran remained intact. This stabilisation in the Middle East has lessened concerns over potential supply disruptions, reducing geopolitical risk premiums. Additionally, robust Norwegian gas exports into the UK, now in their fourth consecutive day of growth, helped ease market tightness. Daily nominations rose to 60.3mcm, and maintenance outages have concluded for now, with the next major works not expected until late August. Furthermore, Gassco has confirmed that technical capacity at the Ormen Lange field will rise from 18.6mcm/day to 31mcm/day from 1 July, enhancing the overall supply picture into Europe. UKCS output remains steady, and the UK gas system was comfortably long, with demand at 127mcm – well below seasonal norms – and the UK a net gas injector into storage. Day-ahead NBP gas settled at 82.60p/therm, while the front-month closed at 94.00p/therm, down 2.75p on the day.
UK power prices tracked the gas market lower, though the near curve exhibited mixed movement following the previous day’s aggressive sell-off. The front-month UK baseload contract fell to £72.15/MWh, a drop of £2.00, while the seasonal contract for Winter 25 declined to £85.50/MWh, down £2.00. Carbon prices exerted additional downward pressure along the curve, with the EUA Dec-25 benchmark dropping by 3.2% to €71.15/tonne. Wind output collapsed, averaging just 4.5GW – a 68.1% drop from the previous day – which limited further downside in short-term prices by necessitating more gas-fired generation. Although UK temperatures remained above seasonal averages, increasing cooling demand has been tempered by improved wind forecasts for the coming days. Power imports via interconnectors were largely steady, though limited by maintenance across parts of the network.
In other commodities, Brent crude declined modestly to $67.68/bbl as markets absorbed the reduced geopolitical tension and limited changes in global supply-demand dynamics. US LNG continued to dominate European import volumes, with multiple cargoes arriving across terminals in Belgium, the Netherlands, and the UK, notably a 160mcm delivery into Milford Haven from Qatar. Coal prices remained stable but soft, with ARA CIF Cal-26 settling at $109.38/tonne. European carbon prices also dropped amid options expiry, and with demand still subdued, the EUA Dec-25 contract fell €2.39 day-on-day. Overall, the wider commodity complex reflected a market in consolidation, with few immediate bullish catalysts.