Energy Market Update - 17 April 2025
Energy prices continued to rise on Wednesday as traders reacted to EU storage concerns and ongoing geopolitical uncertainty. Gas and power markets posted gains despite mixed demand signals and improving renewable output.
European natural gas prices extended their recent upward trend, with UK NBP front-month contracts rising to 86.88p/therm, up 2.56p from the previous day. The TTF May-25 contract similarly advanced to €35.58/MWh. These gains were driven largely by concerns surrounding EU storage refill progress. Aggregate European gas storage levels stood at 35.96%, which is still substantially behind last year’s level by 26.36% and about 11% below the five-year average. Traders remain focused on the EU’s 90% fill target by November, which ACER says will require a 20% year-on-year increase in LNG imports. Italian government-backed storage auctions are also adding upward pressure to near-term prices, creating more aggressive injection buying in Southern Europe. From a supply perspective, the UK system was close to balanced at 188.33mcm demand, supported by consistent Norwegian flows (332.9mcm/day) and stable LNG send-out from terminals such as South Hook and Dragon. No unplanned outages were reported, but upcoming planned maintenance on Norwegian pipelines and UK infrastructure could reduce throughput in the months ahead. Mild weather across Northern and Western Europe, with temperatures expected 3–4°C above seasonal norms in countries like Germany and the Netherlands, is expected to limit LDZ demand. However, reduced wind generation may counteract some of that softness through increased gas-for-power demand.
UK electricity prices also posted gains, with the day-ahead baseload contract settling at £82.79/MWh. Prompt contracts benefited from firmer spark spreads and strong correlation with gas markets. Wind generation surged to over 15GW on Wednesday, covering around 45% of the generation mix. However, forecasts suggest output may dip below seasonal averages next week, particularly in Germany and the Netherlands, adding further support to thermal generation demand. In the UK, NESO’s summer outlook reiterated that supply margins remain sufficient, but highlighted a growing likelihood of negative intraday prices during solar peaks due to low demand periods. A swathe of nuclear maintenance, particularly across the Heysham and Torness fleets, is set to reduce zero-carbon baseload availability and could elevate reliance on interconnectors and flexible gas plants. UK imports remain strong due to lower forward prices in France and the Netherlands, keeping interconnector flows directionally in favour of UK imports.
Brent crude futures edged higher to $65.85/bbl, supported by a weaker dollar and expectations of stronger industrial activity if the EU ramps up domestic output to offset stalled US tariff negotiations. Meanwhile, EUA carbon prices climbed to €66.97/tCO2, supported by speculative positioning tied to possible changes in European industrial strategy. The UK carbon market remained flat, with the UKA Dec-25 contract unchanged at £47.40/t. Coal markets eased slightly, with the ARA CIF Cal-26 contract down $0.92 to $109.60/tonne. LNG prices also rose, with the JKM benchmark for Asia reaching $11.86/MMBtu and European spot LNG (TTF-linked) climbing to $11.84/MMBtu. Supply disruption in Asia continues to pose a risk, with at least three trains at Malaysia’s Bintulu facility offline, prompting concerns over tighter global availability. However, four LNG cargoes are expected to arrive in the UK in the coming weeks, helping to stabilise local regasification volumes.