Energy Market Update - 26 March 2025
Energy markets continued their downward trajectory yesterday, with European gas prices declining further amid ongoing diplomatic developments and shifting market fundamentals. Agreements on a temporary ceasefire for energy infrastructure and maritime security in the Black Sea provided some bearish sentiment, though uncertainty remains over Russia’s conditions for lifting trade restrictions. UK power prices followed gas lower, despite revisions to wind forecasts and upcoming interconnector constraints.
European gas prices weakened as traders responded to diplomatic discussions in Saudi Arabia. While the agreements in principle—covering energy infrastructure protection and Black Sea trade security—offered some reassurance, Russia’s demand for sanctions relief in agricultural and fertiliser exports remains a point of contention. Meanwhile, with the winter season nearing its end, storage concerns are increasing, particularly with below-seasonal temperatures forecast throughout April. The European Commission is finalising a new approach to gas storage refilling, likely settling on a flexible two-month window to reach 90% capacity.
At settlement, the TTF front-month contract dropped to €41.56/MWh from €42.75, while the UK NBP front-month fell to 100.78p/therm from 103.97p. This morning, the TTF front-month was down further to €41/MWh, with the UK NBP front-month trading around 101p/therm. Norwegian gas flows to the UK remained stable at 327 mcm/day, with no unplanned outages reported. EU gas storage levels were recorded at 33.91% full, slightly down from the previous day. LNG supply to the UK remains steady, with four cargoes expected in the coming weeks, compared to five in the previous period.
UK power prices softened alongside weaker gas markets. The front-month baseload contract settled at £88/MWh, unchanged from the previous session, while the front-season contract edged up slightly to £85/MWh from £84. Wind generation forecasts for next week were revised upward by 0.3GW to 8GW, although this remains 10-20% below seasonal norms. Solar output is expected to pick up marginally into April, though gas-fired generation is likely to play a crucial role in balancing supply.
Interconnector flows remain a key factor, with the 2GW IFA1 UK-France link set to operate at 1GW capacity from 31 March to 25 April due to planned maintenance, restricting cross-border electricity trade. Elsewhere, the UK gas system opened 13 mcm long this morning, reflecting reduced demand expectations.
In broader energy markets, Brent crude remained steady at $73/bbl, while European carbon prices (EUAs) softened to €70/t from €72. The Henry Hub natural gas benchmark declined to $3.84/MMBtu from $3.91, while the Asian LNG JKM price dropped to $13.15/MMBtu from $13.39. The TTF-equivalent LNG price fell to $13.17/MMBtu from $13.53. Coal markets saw slight movement, with the ARA CIF Cal-26 contract settling at $103.47/tonne.