Another quiet week so far, though the front seasons are seeing some marginal drop-off amid poor liquidity (please see chart below detailing Winter-25/Summer-26/Winter-26 down on the week/month/3-months).
Conditions remain ‘summery’ and benign, with the bulls citing a heightened risk of cooling demand – though evidently nobody is listening as prices remain soft amid solid supply, seasonally low demand, very low storage withdrawals, and steady/sustained storage injections.
European inventories are now at 72% versus the 5-year average of 77% – so panic over missing minimum storage requirements in time for the heating season are but a fading memory.
Asian demand for LNG remains subdued, and vessels continue to enjoy higher profits delivering to European shores (which remains the primary supportive driver in this market – as our prices need to stay high enough so as to continue to attract arrivals to our shores).
If prices fall too far, our ability to replenish storage would be hampered, and prices would then spike accordingly to reflect potential scarcity/supply tightness.
For buyers, this summer has been about hedging on the right side of the trading range – but with 49 days remaining of Summer-25, the trading window grows ever tighter.
Temperatures look set to be above seasonal norms for most of August, though wind outputs are letting the side down so far this week.
Late buyers for Winter-25 deliveries need to be mindful that for most of September, Norway’s annual scheduled maintenance climax will seeing significantly reduced pipeline flows to Europe (limiting storage injections).
Trump and Putin are due to meet in Alaska on Friday off the back of Trump’s threats to tighten the sanction squeeze on the Kremlin.
Russia remains understandably keen to resume gas exports – notably this week, a former Sovcomflot Arc7 ice tanker has off-loaded at the heavily sanctioned Arctic LNG 2 export terminal in the Gydan Peninsula (Northern Russia).
Putin will no doubt be looking to use his talks with Trump to improve Russia’s standing in the global LNG market (perhaps in exchange for concessions with regards Ukraine, though this still seems very unlikely).
Russia has talked recently of interest in exporting LNG to new markets like Thailand and Mexico – of course, existing (and possibly worsening) sanctions make Russia an unattractive trading partner for new markets.
Monthly Day-Ahead averages for the month so far are at 79p/therm or 2.65p/kwh (all but unchanged from the start of the month, reflecting very low-short term risk).
ELECTRICITY
The front two Seasons (Winter-25/Summer-26) are basically unchanged since the onset of Winter-24 (please see chart below) – reflecting an inherent support in the market at prevailing levels which looks unlikely now to break to the downside before the onset of Winter-25.
On the Carbon side of things, UKAs are increasingly correlated to EUAs (following the “common understanding” reached between the UK/Europe to link emissions markets at the UK-EU summit in London on 19th May).
Dec ’25 UKA benchmark prices are at £51.70/tn on the mid-price, and testing established resistance levels.
Today’s UK electricity generation mix is neutral in nature due to poor wind outputs amid higher cooling demand – specifically, renewables are contributing 34%, thermal at 31% (gas and coal) and low carbon at 21% (nuclear and imports).
Monthly Day-Ahead averages for the month so far are at £6/mwh or 6.4p/kwh (so, on target to be the lowest month so far this summer, reflecting overhelmingly bearish fundamentals and very low short-term risk).
