Energy Market Update – 27 May 2025
Energy markets opened the week on a firmer note, supported by ongoing Norwegian supply issues and easing trade tensions between the US and EU. Gas prices rose due to continued outages at Troll, while power markets diverged with falling UK spot prices and firmer seasonal contracts.
Natural gas markets were led higher by the unplanned outage at Norway’s Troll gas field, which removed 35 million cubic metres per day from supply. Gassco confirmed that the fault, linked to a power issue, would persist until at least the end of May. This, coupled with maintenance at the Visund field, has significantly reduced Norwegian export capacity. Although Langeled nominations showed some recovery to 19.7 mcm/day, they remain volatile. The UK NBP Day-Ahead contract rose by 1.45p to 87.25p/therm, while the front-month and winter-25 contracts settled at 86.02p/therm and 96.81p/therm respectively. UK gas system demand climbed to 124.23 mcm, reflecting stronger gas-for-power use, while LNG send-outs stayed weak at 9 mcm/day, down from 14 mcm/day last week. EU gas storage progress remains sluggish, now at 46.3% fullness—well below last year’s 68.5%. Germany and the Netherlands are notably lagging, adding to bullish pressure as summer injections fall behind schedule.
In the power market, UK Day-Ahead baseload prices plunged to £62.90/MWh, shedding £25.68 since Friday. The drop was driven by elevated wind output and low weekend demand, which offset the upward pressure from rising gas prices. However, seasonal and quarterly contracts moved higher, with Q3-25 at £80.12/MWh and Winter-25 at £87.53/MWh. Wind generation in the UK is forecast to remain strong into early June, weighing on short-term prices. Continental markets mirrored this trend, with Germany and France also experiencing high wind output over the weekend. A slight decline in renewables is expected in early June, which may reverse some of the current downward pressure. UK nuclear availability is limited by continued outages at Heysham, Hartlepool, and Torness, raising gas-for-power demand during low-wind periods. Interconnector flows from France and Belgium remain steady, but as TTF prices move higher—now at €36.35/MWh—UK import competitiveness could diminish.
Brent crude prices edged up to $64.78/bbl, supported by the postponement of US tariffs on EU goods, which eased immediate macroeconomic risks. Gains were limited by forecasts of increased OPEC+ production and weak global demand growth. Coal markets saw a minor lift, with the API2 Cal-26 contract trading at $105.82/tonne, helped by logistical constraints on the Rhine and incremental Asian demand. Carbon prices continued their retreat, with EUA Dec-25 falling to €71.56/tCO₂ and UK ETS Dec-25 to £51.69/tCO₂. The decline reflects ongoing weakness in industrial activity and increased speculative selling, as traders reassess future price stability amid EU regulatory uncertainty.