Energy Market Update - 09 April 2025
Energy markets moved lower again on Wednesday, with natural gas and power contracts dropping amid intensified trade tensions and rising US export expectations. The renewed tariff dispute between the US and China, combined with expectations of redirected LNG supplies to Europe, weighed heavily on sentiment.
Natural gas prices dropped as markets reacted to the formal implementation of heightened US tariffs on Chinese imports, and Beijing’s decision to maintain its own 34% retaliatory tariffs. With the additional 50% US tariffs now in effect, the likelihood of Chinese demand for US LNG has sharply declined. This is expected to redirect cargoes towards Europe, at a time when gas storage levels are beginning to rise and supply remains healthy. European gas storage was last reported at 34.95% full, showing marginal change from the day before.
Norwegian flows were nominated at 325 mcm/day, up from 313 mcm/day, despite unplanned outages at the Aasta Hansteen field. UK system demand was slightly down, and the network remained well balanced. The TTF front-month contract settled yesterday at €36.23/MWh and traded this morning around €35/MWh, reflecting a further €1/MWh drop. UK NBP gas followed suit, with the front-month closing at 88.75p/therm, down from 90.77p, and trading near 89p/therm this morning.
Power prices also declined, led by softer gas prices and strong renewable generation forecasts. Day-ahead UK baseload fell to £83.11/MWh from £86.40, while the front-month contract dropped to £72/MWh. The outlook for wind and solar generation remains above average for the rest of the week, further reducing demand for gas-fired generation. Additionally, improved interconnector flows and warmer weather have helped balance the system.
On the generation side, gas-fired plants accounted for around 49% of the UK power mix earlier this week, supported by lower wind output. However, the expected rise in wind and nuclear output heading into Q3 could reduce this reliance. In Europe, similar bearish trends were observed, with prices pressured by strong renewable forecasts and declining gas inputs.
In other commodity markets, Brent crude slid to $62.82/bbl, down from $64.21, as markets adjusted to reduced demand prospects amidst global economic uncertainty and expanding trade tariffs. The decision by President Trump to reclassify coal for broader use in domestic energy generation also added pressure to global coal benchmarks.
European carbon prices eased further, with EUA December 2025 contracts falling to €62.06/tonne, from €62.84, amid muted industrial activity forecasts and sustained mild weather. Coal prices on the ARA CIF Cal-26 contract edged up slightly to $107.92/tonne, though the broader outlook remains subdued.