Energy Market Update – 30 May 2025
Energy prices fell sharply across European markets on Thursday, as increased Norwegian pipeline flows and a mild, windy forecast weighed on sentiment. Legal volatility surrounding U.S. tariffs added to wider uncertainty.
UK natural gas prices dropped across both prompt and forward contracts following a substantial recovery in Norwegian exports, particularly via the Langeled pipeline. The Day-Ahead contract fell to 82.60p/therm, while the June front-month settled at 84.05p/therm, reflecting a weekly decline from near 88p/therm. Norwegian flows into the UK rose to 36.79mcm, up from 23.1mcm, as both planned and unexpected outages subsided. Nonetheless, maintenance activity continues to limit full capacity, with schedules from Troll and Easington indicating further constraints into the autumn. UK Continental Shelf output reached 95.3mcm/day, supporting a long system. Meanwhile, storage injections remain strong with UK demand at 127mcm/day — well below the seasonal norm of 147mcm/day — aided by mild weather and robust wind generation. European storage now stands at 47.15%, matching 2022 levels, although Germany and the Netherlands lag the continental average.
Electricity prices in the UK mirrored the downward movement in gas markets. The Day-Ahead baseload contract closed at £56.54/MWh, down from earlier highs, while Summer 2025 dropped to £72.26/MWh and Winter 2025 to £85.16/MWh. Renewable output was particularly strong, accounting for 63.5% of generation, with wind and solar both outperforming seasonal norms. CCGT usage declined sharply, contributing only 7.5% to the generation mix. Interconnector flows from France and the Netherlands remained consistent, with French nuclear output stable despite some short-term maintenance. In the wider European market, spot and near-curve contracts declined by 3–5% in France, Germany, and the Netherlands, as mild, windy conditions reduced thermal generation needs. Early June forecasts continue to predict subdued demand.
Among other commodities, Brent crude edged down to $64.15/bbl, pressured by weak economic indicators and falling refinery margins. WTI closed at $60.94/bbl. Uncertainty around U.S. trade policy persists after a court briefly blocked President Trump’s new tariff package, only for an appeal to reinstate it, stoking further concern in global markets. Coal also declined, with ARA CIF Cal-26 settling at $103.25/tonne. Carbon markets weakened, as EUA December 2025 dropped to €70.94/tCO₂e amid reduced demand expectations from the industrial and power sectors. The UK ETS price moved slightly higher to £51.82/tCO₂e, suggesting divergent compliance trends.
LNG benchmarks continued to soften, with JKM at $12.29/MMBtu and Northwest European spot around $11/MMBtu. Despite lower prices, terminal activity remains high. Several U.S. cargoes are due to arrive at Zeebrugge, Dunkirk, Gate, and Wilhelmshaven, highlighting continued strength in transatlantic supply chains. UK energy security continues to rely on a blend of LNG imports and interconnector support, particularly as domestic production stabilises. Currency markets had little effect this week, with GBP/EUR steady at 1.1937 and GBP/USD at 1.3283.