UK Energy Market Analysis - November 2025

Despite very high gas demand and strong short-term power prices last week (with UK baseload clearing at £109.23/MWh for Tuesday delivery), prices for December and beyond have fallen sharply. Mild and windy forecasts from the weekend onward, together with hopes that ongoing peace talks could increase Russian energy exports, have reinforced an already bearish outlook driven by expectations of higher LNG supply in the coming months. Summer 26 gas, for instance, is down more than 5.00 ppt (7%) in a week, now trading at 67.50 ppt, an attractive buying opportunity given relatively low gas storage levels and the risk that peace negotiations may take longer than the market currently anticipates.

Economic Environment

• The Bank of England kept interest rates unchanged at 4% but signalled a possible cut as early as this month amid signs of a weakening labour market and lingering (though easing) inflation pressures.
• Adding to this backdrop, UK inflation fell to 3.6% in October (the first deceleration since March), supporting the case for a BoE rate cut in December, as the planned Budget tax increases risk adding strain to an already fragile economy.
• British retailers reported the sharpest deterioration in confidence in 17 years, with sales extending their decline amid persistently soft demand, as households remain cautious in their day-to-day expenditure.

Oil

• Despite ongoing US sanctions on Russian oil, prices fell in November, weighed down by weak market fundamentals and growing fears of oversupply. Hopes for a rapid Russia–Ukraine peace agreement, which had surged at the start of last week, have since faded. However, prices still closed lower on the month, with Brent ending near $63 per barrel, its fourth consecutive monthly decline.
• The IEA raised its global oil supply forecasts, now expecting increases of 3.1 million bpd in 2025 and 2.5 million bpd in 2026, both up 100k bpd on the month and signalling a larger surplus in 2026.
• Goldman Sachs projects oil prices to fall through 2026, citing a production surge that will maintain a market surplus of about 2 million bpd. It forecasts Brent at $56/bbl and WTI at $52/bbl in 2026.

Gas

• During a call with analysts, ExxonMobil executives said they expect a “cooldown” LNG cargo sourced from Qatar to arrive at the Golden Pass facility in Southeast Texas by the first week of December. The delivery should enable the plant to begin processing gas shortly thereafter, with initial export cargoes potentially reaching Europe by the end of January.
• As part of its Q3 2025 earnings update, Cheniere Energy reported that Stage 3 of its LNG expansion is now 90% complete. Train 4 is expected to produce its first LNG imminently and reach substantial completion by year-end, while trains 5, 6 and 7 remain on schedule for substantial completion next year, targeted for spring, summer, and fall, respectively.
• China’s LNG imports are expected to fall for the 13th straight month in November, down 5.5% year on year, as rising domestic production reduces demand for LNG. Imports have been declining all year, hitting a six-year low earlier in 2025. Meanwhile, China is increasing pipeline gas imports from Russia and has agreed to expand the Power of Siberia pipeline to over 100 billion cubic meters annually.

Power

• EU countries have agreed to begin negotiations to link their carbon markets with the UK, a move supported by industry on both sides. The linkage would remove carbon border tariffs, but it will take years to implement, meaning UK firms are still likely to face the EU’s carbon levy starting January 1.
• Britain has chosen Wylfa on Anglesey in North Wales as the site of its first Small Modular Reactors (SMRs), part of a £2.5 billion plan to expand nuclear power. Rolls-Royce’s SMR design was selected in June, and the first units are planned to connect to the grid in the 2030s.
• Low wind generation, combined with rising demand from colder weather, tightened supply throughout November and pushed up spot market volatility. Prices for Summer 26 traded within a narrow £4.15/MWh range and ended the month at £68.25/MWh, down around 4.5%. 

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