Weekly Market View – w/c 30th June, 2025
Weekly Market View – w/c 23rd June, 2025
Market Drivers May 2025
Bearish Drivers
· Strong Wind Generation & Milder Late-May Weather: Reduced electricity demand and displaced gas-fired generation, especially in the UK.
· Northwest Europe received more LNG cargoes, easing short-term supply concerns despite geopolitical risks.
· Despite starting low, higher sendout and revised supply expectations improved summer fill projections (e.g., 93% fullness by Nov vs. prior 87%).
· Expected 35 mcm/d increase in Norwegian imports and no July maintenance led to a looser UK balance outlook.
Bullish Drivers
· Rising conflict between Israel and Iran mid-May introduced a risk premium, especially around LNG supply routes.
· The later U.S. military strike on Iran (June 22) intensified concerns over the Strait of Hormuz.
· Maintenance and unplanned outages early in the month temporarily reduced flows to Europe, lifting prices.
· Colder-than-Normal Early May Weather: Boosted heating demand in Northwest Europe, supporting gas and power prices.
· Tight EU Gas Storage Levels: Inventories remained ~47% full early May—well below seasonal norms—raising concerns about refill pace.
In May 2025, the UK energy market experienced a modest cooling in both gas and electricity wholesale prices. Gas prices dropped by around 4.2% to 82.60 p/th, while electricity prices declined by approximately 4.8% to £77.78/MWh. These decreases were driven largely by milder weather and strong wind generation late in the month, which reduced demand and eased pressure on supply. However, the market remained volatile, with early May seeing price spikes due to colder temperatures and temporary disruptions in Norwegian gas flows.
Early June saw spot gas prices in Europe moving sideways, similar to May’s price corridor. However, mid-month, tensions between Israel and Iran escalated, introducing a significant bullish risk premium. The situation intensified further following a U.S. attack on Iran on 22 June.
This geopolitical volatility could heavily influence gas prices in July, particularly around LNG supply. The key concern is potential disruption to Qatari LNG exports via the Strait of Hormuz. Although Iran’s Parliament voted on 22 June to close the strait, the final decision rests with its Supreme National Security Council. As of now, LNG flows remain uninterrupted. The lack of market panic so far reflects both the uncertainty around enforcement and the strait still being open.
LNG sendout is forecast to dip marginally due to maintenance and stronger cooling demand in Northeast Asia, which will likely slow net storage injections. However, higher overall LNG arrivals this summer are helping close the storage gap versus last year—from 128 TWh in mid-June to a projected 109 TWh by end-July. We now anticipate NWE storage reaching 66% by the end of July, up from our previous 61% forecast, though still below the 85% level seen in July 2024.
It is now projected that NWE reaches 93% storage fullness by 1 November, compared to earlier estimates of 87%. This revision reflects robust sendout in June and an expected increase in LNG supply in September–October, as facilities come back online and demand elsewhere falls.
Although July’s NWE gas balance is slightly tighter than June’s, the improved storage trajectory and relatively loose supply-demand fundamentals for summer 2025 support our moderately bearish outlook on the TTF day-ahead contract. That said, geopolitical risks remain elevated following the events of 22 June, though current market reactions have been restrained.
In the UK, the gas balance is expected to ease further in July, with Norwegian imports set to rise by 35 mcm/d due to the absence of scheduled maintenance. This points to a more bearish trend for the NBP day-ahead contract compared to TTF. We expect the NBP-TTF spread to widen to about 5p/th (up from 3p/th), which could incentivize traders to secure more pipeline capacity for exports to the Continent.