Energy Market Update - 29 April 2025
Energy markets were broadly stable but trended slightly lower as geopolitical easing and unseasonably warm weather kept demand soft. A temporary Russian ceasefire and a power outage in Iberia were key developments.
Natural gas prices continued their decline across both UK and European hubs. The UK NBP May-25 contract fell slightly to 78.27p/therm, while the TTF equivalent held steady at €32.00/MWh. Prompt pricing remained soft this morning, with the NBP Day-Ahead at 77.20p/therm amid a marginally undersupplied system. This shortfall followed reduced flows from Langeled due to maintenance at Ormen Lange and Kårstø, lowering Langeled nominations by 7mcm/day. Nonetheless, Norwegian exports to Europe remain elevated overall at 307mcm/day.
UK gas demand continues to drop in line with warm temperatures across Northwest Europe, now running around 50mcm/day below normal. Despite lower demand, storage injections are ramping up. EU storage has reached 38.69%, mirroring the refill pace of 2022. UK mid-range storage sites are actively injecting, while Rough is still withdrawing, likely due to market signals. Four LNG vessels are expected to arrive in the UK within two weeks, suggesting stable but unspectacular supply growth.
UK power prices mirrored the weakness in gas markets. Day-Ahead baseload closed at £79.88/MWh, slightly down, with May-25 contracts trading at £71.90/MWh. Forward power prices also softened, though longer-dated contracts showed some resistance, potentially reflecting concerns around LNG balance and supply reliability. UK nuclear availability remained within planned limits, with Torness 2, Hartlepool 2, and parts of Heysham offline for scheduled maintenance. Interconnector flows into the UK remained healthy and economically favourable, cushioning against European volatility.
The Iberian power system suffered a major blackout, cutting 15GW from the grid, attributed to a transmission failure with France and low inertia conditions. The disruption, which briefly impacted Southern France, was largely resolved by Tuesday. Renewable output in France and Iberia underperformed, with solar unable to offset the grid shock. UK wind generation is forecast to remain low into early May, potentially increasing reliance on gas-fired generation. Nonetheless, overall fundamentals remain weak due to mild temperatures and lacklustre industrial demand. Carbon prices added no support, with UKAs falling below £48/tCO2 and EUAs continuing to decline to €65.31/tCO2.
Crude oil prices dropped, with Brent settling at $65.86/bbl, weighed down by uncertainty over US-China trade tensions and weak macroeconomic indicators. Although trade negotiations remain ongoing, the absence of a resolution is keeping sentiment cautious. OPEC is expected to maintain current output levels in its May meeting, though markets are factoring in potential supply increases later in the year. Coal edged higher, with ARA CIF Cal 26 contracts closing at $104.60/tonne. LNG prices were stable to slightly firmer, with JKM at $11.28/MMBtu and TTF-equivalent LNG at $10.82/MMBtu. US Henry Hub gas rose sharply to $3.34/MMBtu on strong early summer power demand and cooling load expectations.