Energy Market Update – 28 May 2025
Energy markets were mixed on Tuesday, with gas and power prices diverging slightly due to Norwegian supply issues and shifting renewable forecasts, while macroeconomic uncertainty and geopolitical developments continued to weigh on sentiment.
Natural gas markets traded in a narrow range, supported by tightening fundamentals. UK prompt contracts remained relatively firm, with the NBP Day-Ahead price settling at 88.50p/therm. This was a slight drop from Monday but remains elevated compared to seasonal norms. Windier conditions across Western Europe, particularly in the UK and Germany, lowered gas-for-power demand intraday, though this was offset by new Norwegian supply risks. Unplanned outages at both the Troll and Visund fields deepened existing maintenance-related constraints. Troll flows were reduced by as much as 34.6mcm/day through 29 May, bringing total Norwegian exports down to 276mcm/day — the lowest level seen since early spring. UK demand was recorded at 126.5mcm, supported by stable LNG sendout of 9.3mcm across South Hook and Isle of Grain, while mid-range storage facilities saw light injections. On the continent, the TTF Front Month contract declined to €36.00/MWh, despite steady LNG deliveries into Northwest Europe. Traders remain wary of any disruption in LNG arrivals or rerouting risk, particularly as EU storage levels, now at 46.58%, track closely with the 2022 refill trajectory but still demand high injection rates to meet the 90% target by November.
UK electricity prices rose sharply at the prompt, before softening slightly in today’s trade. The Day-Ahead baseload settled at £76.71/MWh, marking a daily increase of £13.81, with current trades around £75/MWh. Price movement tracked gas, but was moderated by stronger renewable generation expectations. Wind and solar output are forecast to remain above seasonal norms into early June, particularly in Germany and France. Near-term contracts held firm, with Summer 2025 averaging £80.24/MWh and Winter 2025 at £87.47/MWh. Cross-border flows remained robust, supported by low French demand and good nuclear availability, aiding exports into the UK. UK nuclear generation was stable, with limited outages confined to Heysham and Hartlepool. In contrast, continental forward prices saw slight easing, reflecting softness in carbon and coal markets. French baseload contracts continue to trade below UK equivalents, reinforcing net export incentives via the IFA and Nemo interconnectors.
Brent crude edged lower to $64.09/barrel amid persistent concerns over global economic performance. While OPEC+ maintained rhetoric around supply discipline, markets await guidance from the upcoming Joint Ministerial Monitoring Committee on potential output changes. European carbon markets gave back Monday’s gains, with EUA December 2025 contracts falling by €1 to €71.76/tonne. UK Allowance prices moved up slightly to £52.05/tonne, narrowing the spread with EUAs to below €20/tonne for the first time since March. This shift was largely attributed to reduced speculative activity and marginally improved UK industrial demand expectations. LNG prices were steady, with the JKM benchmark at $12.48/MMBtu and TTF-linked cargoes at $12.30/MMBtu, reflecting subdued Asian demand. Despite high LNG import scheduling into Northwest Europe, UK terminal bookings remain sparse, with just one vessel expected in the next fortnight, increasing reliance on interconnector imports and continental oversupply.