Energy Market Update – 29 May 2025
Energy markets held broadly steady on Wednesday, with sideways trading reflecting stable sentiment despite legal and geopolitical uncertainties. Norwegian gas flows and variable renewable output added short-term volatility, while fund positioning helped support prices amid thin liquidity.
UK and European natural gas markets saw marginal declines at the front of the curve, as improved Norwegian supply helped stabilise the system. The NBP Front Month contract slipped to 87.81p/th, while TTF closed slightly lower at €36.69/MWh, rebounding to €37 in early trading. A key driver was the revised outlook on the Troll field outage, now expected to reduce output by only 16mcm/day compared to the previous estimate of 35mcm/day, with a full recovery forecast by the weekend. This supported a recovery in Langeled flows to over 31mcm/day and lifted overall Norwegian nominations to 295mcm/day.
UK gas demand fell to 104mcm/day due to milder weather, although gas-for-power use rose to 17mcm/day as wind generation dipped. LNG send-out from South Hook and Isle of Grain remained stable at 9.3mcm/day. UK storage levels now stand at 37%, below the EU average of 46.87%, with the continent maintaining steady injection rates to meet the 90% November target. LNG import expectations have increased slightly, with two cargoes now due in the UK in the coming fortnight, although Northwest Europe continues to attract the bulk of Atlantic basin arrivals.
UK power prices experienced a sharp drop on Wednesday. Day-Ahead baseload prices fell to £52.08/MWh from £76.71, with peak prices plunging to £26.54/MWh amid low demand and strong renewable output. Front Month contracts for June settled at £73.50, while Winter 2025 closed at £87.41. While summer contracts are showing signs of softening, winter pricing remains supported by long-term heating demand concerns.
Wind output remained volatile, hovering around seasonal norms but expected to fall below average by the weekend before rebounding next week. This unpredictability continues to impact short-term balancing prices. Imports from France and the Netherlands offered stability, while gas-fired generation served as the main marginal source. UK nuclear capacity held steady with no new unplanned outages, and French availability stayed high despite minor fuel-saving measures by EDF.
Brent crude rose slightly to $64.90/bbl, supported by a weaker U.S. dollar and expectations that OPEC+ will maintain current production quotas. Despite this, the oil market remains in contango, reflecting weak near-term demand. Carbon market sentiment diverged, with EU Allowances rising to €72.07/tCO2 on speculative buying, while the UK ETS declined slightly to £51.72/tCO2 as industrial demand remained soft. LNG prices were largely stable, with JKM at $12.46/MMBtu and TTF-equivalent LNG near $12.14/MMBtu, as subdued Asian demand left Europe as the main balancing region.