Sep25 Energy Market BriefDownward Price Movements From July

In August, we returned to a bearish pricing environment compared to the previous month with both shorter-term and longer-term gas contracts registering downward price movements from July.

On average, seasonal gas contracts from winter 25 to winter 27 were 3.4% lower in August. The most significant average price losses were concentrated across winter 25 to summer 26, down 4.7% on average across the two seasons.

The sensitive political landscape surrounding tariffs and sanctions introduced by U.S. President Donald Trump continued to be a dominant market force in August. On 6 August, Trump announced an additional 25% on Indian exports over the purchase of Russian crude oil. Prior to the announcement, gas traders remained cautious over its potential disruption to energy flows, and while gas and LNG supplies have yet to be targeted under the current sanctions and tariff threats, the uncertainty over future developments kept the market apprehensive across the month.

As a result of this, day-ahead gas fell 1.8% from July to average 79.52p/th.

However, stronger losses at the day-ahead level were limited by Qatar placing gas supply threats on the EU, raising risks of supply disruption. We also saw reductions in output from both the UK Continental Shelf and Norwegian Continental Shelf, limiting total gas flows into GB.

Front-seasonal contracts shared the collective average price loss, with September 25 down 4.4% to 80.78p/th and October 25 falling 4.9% to average 80.99p/th. Despite the drop, longer-term contracts continue to find influence from developments in the Russia-Ukraine conflict, with reduced expectations of a ceasefire agreement continuing to raise the risk premium associated with longer-term contracts.

Following the downward movement seen in its gas counterpart, August saw day-ahead power prices drop 6.1% on average to £75.58/MWh.

These losses were the result of periods of strong wind generation acting to reduce the reliance on more expensive forms of power generation.

As a result, day-ahead prices fell to their lowest level seen since August 2024, at £22.75/MWh on 4 August following high wind output from Storm Floris as prices were driven down in anticipation of high wind generation on 5 August which contributed to 56.5% of the generation mix – reducing gas for power demand.

This trend continued into the latter stages of the month, following the arrival of Storm Erin, leading to stronger levels of wind generation on the system.

Front-month power contracts, September and October 25, shared the price direction of their gas counterparts, subsequently falling 3.3% on average to sit at £76.68/MWh and £74.64/MWh, respectively. Likewise, seasonal power contracts from winter 25 to summer 27 registered losses, down 0.9% on average.

Brent crude oil fell month-on-month, averaging $67.23/bl, down 3.1%.

Prices continue to be driven down by bearish movements on the supply side, with the OPEC+ alliance announcing a production increase of 547,000 barrels per day in September, citing steady global economic output and current healthy oil market fundamentals. Additionally, non-OPEC producers such as Brazil and Norway have recently launched new production, further improving supply projections.