Apr25 Energy Market BriefGas and Power Contracts Register Losses

In March, we saw all tracked gas and power contracts register losses when compared to February, despite the first month and a half of 2025 showcasing relatively consistent gains in wholesale energy costs.

Seasonal gas contracts from summer 25 to summer 27 were, on average, 12.2% lower in March when compared to the previous month.

March saw lowering wholesale prices, stemming from milder weather conditions across GB and much of north-west Europe, alongside the European Commission proposing to extend the Gas Storage Regulation by two years, out to 2027, emphasising the importance of strategic reserves in ensuring energy security.

Any adjustments to gas storage mandates have the potential to drive prices moving forward, with the EU outlining that it will consider allowing flexibility for gas storage if “specific market conditions” mean that targets are not met.

The proposal to adjust the 90% storage target deadline from 1 November to 1 December was introduced as a measure of flexibility, designed to limit stronger competition for the procurement of gas during the summer delivery period.

As we move further into the traditionally warmer spring season, we expect prices to ease further. This period brings warmer temperatures and easing demand from gas and other fossil-fuel fired emitters called upon to meet demand, which typically represent themselves as more expensive forms of generation.

Acknowledging natural gas is a global commodity, the UK is not insulated against wider price movements – particularly in Europe. However, the UK of late has benefitted from lowering Dutch TTF prices (European gas benchmark price).

This has brought with it bearish price signals for GB gas prices, but also meant physical trades via piped interconnection has started to become steadily cheaper.

Elsewhere, the healthy supply of LNG reaching UK terminals continues to soften the near-term supply/demand balance.

We saw day-ahead gas fall, down 17.5% to average 101.40p/th, falling to the lowest level seen since September 2024 at 93.00p/th on 6 March.

Similarly, front-month contracts were down 16.2% on average from February, with April 24 averaging 101.02p/th and May 25 at 100.17p/th.

Day-ahead power prices followed the bearish pricing sentiment set from its gas equivalent contract.

As a result, day-ahead power prices in March averaged £90.67/MWh, down 14.7%, falling to a three-month low of £61.49/MWh on 20 March.

Supporting drivers of these losses can be attributed to the lowering of gas prices in the UK, coupled with relatively consistent levels of wind generation observed throughout the month, albeit acknowledging wind generation was lower than that of February.

Warmer temperatures also discouraged gas-for-power demand in the month.

Similarly, front-month contracts were also down 12.2% on average (April 25, £85.78/MWh, May 25, £79.79/MWh).

Brent crude prices dropped 4.7% lower to $71.59/bl, falling to $68.99/bl on 6 March, the lowest level since August 2021 amid reduced market demand and much stronger production from the US since the start of 2025.

Moreover, further losses were impacted by concerns surrounding the impact of US tariffs on the market, alongside rising output from OPEC+producers, who said they intend to proceed with the planned increase to output in April, adding 138,000 barrels per day to the market.

Elsewhere, both UK and EU carbon markets registered losses from the previous month. The EU ETS declined 9.5% to €69.94/t while the UK ETS dropped 2.3% to £43.45/t.