Headlines
It was a mostly bullish week for gas and power contracts last week, with day-ahead contracts registering the largest gains. Following this, day-ahead gas rose 9.5% to 117.05p/th, the highest level seen since November 2023, as reduced temperatures across the week acted to boost gas-for-heating demand, along with lower levels of wind generation on the system increasing demand for gas-fired assets. Moreover, news that Russia’s Gazprom informed Austria’s OMV that it will reduce contracted gas supply to zero on 16 November triggered supply concerns moving into the winter period. As a result, volumes passing through the Ukraine Transit route could nearly halve when Gazprom halts supplies. Likewise, December 24 gas was up 8.9% at 115.88p/th, and January 25 gas increased 8.7% to 116.70p/th. All seasonal gas contracts rose last week, up by 4.2% on average with the summer 25 contract trading at a premium to the winter 25 contract due to the bullish fundamentals outlined, with summer 25 gas increasing 8.5% to 107.55p/th and winter 25 gas rising 7.0% to 105.50p/th. Following its gas counterpart higher, day-ahead power rose 9.3% to £103.55/MWh, with strong support from decreased wind projections, alongside increased consumption forecasts throughout the week creating a bullish pricing sentiment. All seasonal power contracts boosted last week, up 4.3% on average, as summer 25 power gained 6.5% to £83.25/MWh, and winter 25 grew 4.9% to £88.30/MWh.
Baseload electricity
Forward curve comparison
- Day-ahead power rose 9.3% to £103.55/MWh. Prices found bullish influence from increases in gas prices and an increase in reliance on gas-fired generation due to a reduced proportion of wind power in the generation mix.
- Likewise, December 24 power climbed 6.5% to £96.30/MWh and January 25 power increased 6.0% to £101.75/MWh.
Annual October contract
- Q125 power moved 6.5% higher to £99.30/MWh.
- The annual April 25 contract rose 5.6% to £85.78/MWh, 14.1% lower than the same time last year (£99.88/MWh).
Peak electricity
Forward curve comparison
- Day-ahead peak power was down 7.1% to £105.40/MWh, opposing the movement seen across its baseload counterpart.
- December 24 peak power gained 8.0% to £113.45/MWh, and January 25 peak power increased 5.0% to £119.40/MWh.
Annual October contract
- The annual April 25 peak power contract rose 7.4% to £88.70/MWh.
- This is 11.2% lower than the same time last year (£99.90/MWh).
Seasonal power prices
Seasonal baseload power contracts
- Last week saw all seasonal power contracts rise, up on average by 4.3%.
- Summer 25 and winter 25 expanded 6.5% and 4.9% respectively, rising to £83.25/MWh and £88.30/MWh
Seasonal peak power curve
- All seasonal peak power contracts boosted last week, up 7.4% on average.
- Summer 25 and winter 25 peak power increased 7.3% and 6.9% respectively, rising to £89.40/MWh and £102.40/MWh.
Commodity price movements
Oil and coal
- During the reporting period, Brent crude oil saw bearish movements, down 3.4% to $72.15/bl, in contrast to the bullish movements seen during the previous reporting period.
- Bearish movements were attributed to the expectation of more oil supply due to Trump’s victory in the 2024 US Election. In addition, OPEC stated that it expects global oil demand to decrease by 1.8mn barrels per day (bpd) in 2024, down by 107,000bpd from its prior forecast.
- Demand concerns were further heightened by reports that China’s factory output growth slowed during the previous month as well as its property sector having reductions in demand.
- However, these losses were limited by supply concerns due to US gasoline stocks decreasing by 4.4mn barrels, with stockpiles being at their lowest levels since November 2022.
- OPEC+ noted that non-OPEC+ countries are expected to increase their oil production in 2025, which could lead to further price losses.
Carbon (UK and EU ETS)
- Last week represented a bullish period for the EU ETS, rising 2.9% to €67.42/t following price volatility across Dutch TTF gas, in which it remains highly coupled with. However, stronger gains were limited by greater levels of coal-to-gas switching due to higher coal prices across Europe throughout the week.
- For the UK ETS prices remained stable week-on-week, falling 0.1% to £38.26/t, as fluctuations in wind generation led to periods of both higher and lower demand from fossil fuel fired assets to meet demand.
- Likewise, a certain amount of price support remained in place from progressively colder temperatures both in the UK and the EU – acting to increase heating demand both domestically and across the EU across the reporting period.
- Carbon prices are likely to continue to remain volatile across the winter period, finding support from gas contracts. However, it could be that as the winter months continue, strong EU gas storage levels may act to reduce price gains.
Wholesale price snapshot – Friday-on Friday
