Energy Market Update – 27 June 2025
Energy prices declined across the board, driven by de-escalation in the Middle East and robust EU storage activity. Softer gas prices led the movement, pulling down power contracts, while carbon and oil markets showed mixed trends.
Gas prices fell sharply amid growing confidence in a ceasefire in the Middle East, which entered its third day without reported violations. This reduced fears of disruption to supply routes, especially through the Strait of Hormuz. Coupled with this, the European Union has maintained strong net injections into gas storage since late March, with current rates exceeding those of 2023 and 2024. As a result, EU storage levels have significantly narrowed the gap to historical norms. The NBP front-month contract dropped to 92.00p/therm from 94.00 the previous day, while the Summer 2026 contract slipped to 82.00p/therm. Gas system demand in the UK remained below seasonal norms at 128 mcm, with gas for power generation dipping to just 6 mcm due to improved wind output. Langeled and UKCS flows remained firm, contributing 50 mcm and 56 mcm, respectively, to a system that was long by 25 mcm.
In the electricity market, lower gas prices and stronger gas supply fundamentals triggered further losses in UK baseload power contracts. A general downturn across the broader energy complex contributed to the decline, alongside improved supply conditions in Europe. The cessation of Norwegian pipeline maintenance boosted continental supplies, while cooler temperatures cut cooling-related demand. The UK baseload front-month fell to £82.80/MWh from £85.50, while the Winter 2025 contract edged down slightly to £73.75/MWh. Renewable generation in the UK continued to support supply, with above-average wind output helping to ease gas-for-power requirements. The trend is also mirrored across Europe, where wind and solar performance has helped stabilise short-term power margins.
In other commodities, Brent crude stabilised at $67.77/bbl after recent volatility, as investors weighed the ceasefire’s implications against subdued global demand signals. The benchmark has remained within a narrow trading range of $66–$68/bbl. European coal prices were steady, with the ARA CIF Cal-2026 contract at $110.82/tonne, reflecting stable demand despite some cooling in industrial activity. Meanwhile, carbon prices weakened slightly, with the EUA December 2025 contract down to €70.40/tonne from €71.15. This drop was driven by mild weather forecasts and lower power sector emissions. UK ETS prices fell more sharply, losing nearly £2 to close at £47.65/tonne, highlighting reduced domestic demand for allowances.