Although fundamentals have largely been stable this week, prices have started to creep higher in line with rising temperatures due to the extended heatwave. In the UK temperatures are expected to hit 32°C today and remain well above seasonal norms through next week. However, many expect prices to remain rangebound with stable supply and declining demand once the heatwave surpasses. Regardless there are still some concerns over European storage and supply-side risks.
EU gas storage inventories are 61.23% full, according to Gas Infrastructure Europe data and this week the European Parliament gave its final sign-off on a deal to loosen the EU’s rules on filling gas storage, with member states now being allowed to meet the 90% filling target between October and December, rather than by the previous November 1 deadline. However, the market has been closely watching the Rehden facility in Germany, where capacity constraints may limit fill levels to just 45%. The latest Rehden storage auction also concluded without any allocations, with none of the 5 TWh offered being awarded, reflecting market hesitancy or price misalignment. Meanwhile, German industry group INES reported that, based on current bookings, German gas storage facilities are only on track to reach a maximum of 70% capacity ahead of winter. This level is deemed insufficient to ensure supply security in the event of a particularly cold winter. INES has urged the Federal Government to deploy available tools to facilitate storage levels exceeding 70%.
Elsewhere there are increasing concerns on higher Asian demand due to an expected rise in demand for cooling from key Northeast Asian markets of Japan and South Korea. Although current prices are yet to reach levels that will result in spot purchases from more price-sensitive importers. With market participants closely watching macroeconomic cues, storage dynamics, and short-term demand, traders are likely to remain cautious.
In other news this week the UK government has announced it will not move to a zonal system for wholesale energy prices but instead seek to take greater control of the planning process to determine where clean energy infrastructure is built. It had considered breaking the country into zones, with a price based on supply and demand, in the hope it would incentivise businesses to locate nearer to renewable energy sources, potentially cutting the cost of transmission. Instead, it announced reforms that it said would seek to spread out the building of new energy projects around the country, give investors more confidence on where to build and when, and speed up the time it takes to get connections to the power grid.
Flagship Energy’s Tejal Shah Energy Markets Update – 10th July 2025 appeared first on Energy Live News.