May25 Energy Market BriefGas and Power Mostly Trend Down

In April, mostly downward trends were observed across most tracked gas and power contracts, continuing the overall bearish wholesale pricing movements that have been observed since March.

March largely saw temperature related price decreases, while price losses across April were predominantly driven by concerns surrounding a global recession, and the impact this would have on overall demand, following extensive tariffs put in place by US President Donald Trump.

While imports of oil, natural gas, and refined goods were exempt from these tariffs, the tariffs contributed towards wider fears surrounding a global recession and escalated trade disputes.

Seasonal gas contracts from winter 25 to winter 27 were on average 1.6% lower in April when compared to the previous month.

This was due in part to the European Commission announcing that it has approved more flexible storage rules, allowing for a 10-percentage point deviation from the 90% target under adverse market conditions.

Moreover, both day-ahead and longer-term gas prices found downward support from improved peace prospects between Russia and Ukraine, which would limit the risk factor associated with the ongoing war.

Across the month, we saw the day-ahead gas price fall 14.3% to average 86.94p/th, finding bearish influence from decreases across LNG prices.

Slower economic growth due to a trade war poses a risk to global industrial production and LNG demand, keeping prices for the commodity subdued.

Furthermore, strong gas storage stocks across Asia limited LNG import demand from countries like China, South Korea, and Japan, with this group making up a large majority of total market LNG demand. As a result, NBP gas fell to the lowest level seen since July 2024 at 76.17p/th on 29 April.

Likewise, front-month contracts were down 14.7% on average, with both May 25 and June 25 seeing a 14.7% drop to 85.45p/th and 85.71p/th, respectively.

Due to being heavily influenced by its gas counterpart, day-ahead power prices averaged £80.77/MWh across April, down 10.9% when compared to the prices observed last month.

Supporting drivers of these losses can be attributed to the lowering of gas prices and warmer temperatures further discouraging gas-for-power demand in the month.

Moreover, strong solar generation fed through into power prices, with GB setting a new maximum solar generation record of 12.2GW between 12:30 and 13:00 on 1 April.

However, lower wind generation limited stronger losses. Across 7-8 April, higher prices were supported by lower wind contribution to the generation mix, representing 7.8% and 3.8%, respectively, with 8 April representing the lowest share of the generation mix seen since 22 January 2025.

Price losses were also recorded across contracts further out on the forward curve, with May 25 falling 7.4% to £74.04/MWh, and June 25 dropping 6.9% to £74.04MWh. Likewise, seasonal power prices across winter 25 to winter 27 saw a downwards trend, decreasing 1.3% on average.

Brent crude prices fell 7.0% to $66.59/bl, with prices falling to the lowest level seen since April 2021 on 10 April at $63.04/bl.

This was the result of tariff announcements by US President Donald Trump increasing fears of a global recession, leading to a drop in oil demand. Moreover, this was compounded by news of eight OPEC+ countries considering accelerating production hikes for a second consecutive month in June.

This comes after the group’s decision to raise output by 411,000 barrels per day (bpd) from May, up from the initially planned 138,000 bpd.

Across other commodities, the ETS schemes saw a mixed evaluation with UK ETS carbon rising 5.6% to £45.88/t. The EU ETS, however, saw a downward adjustment, falling 6.4% to average €65.49/t due to strong renewable generation across Germany and other large European countries leading to a reduction in carbon intensive forms of power generation.