Headlines
Last week, most tracked contracts registered losses, as strong EU gas storage levels continue to remain a prominent driver of prices ahead of the winter period. Similarly, LNG prices are likely to remain stable over the coming winter amid ample gas inventories in both Europe and Asia. Due to LNG’s status as the marginal price setter for the UK, stability across supply may act to keep prices down. As a result, day-ahead gas dropped 4.1% to 82.05p/th, October 24 gas was down 3.5% at 83.05p/th, and November 24 gas decreased 4.4% to 89.55p/th. Likewise, most seasonal gas prices fell, down by 1.6% on average with both winter 24 and summer 25 gas shrinking 4.2% and 3.3% respectively, subsiding to 91.45p/th and 86.80p/th. However, prices saw some volatility across the week following reports that Ukraine has agreed to transit Azerbaijani gas to Europe. As of 20 September, these reports are unconfirmed, triggering concerns over security of supply after the current 5-year deal with Russia’s Gazprom ends on 31 December. Following its gas counterpart lower, day-ahead power dropped 3.2% to £83.00/MWh, as periods of lower wind generation were offset by above-average temperatures reducing heating demand. All seasonal power contracts declined last week, down on average by 3.7%, as winter 24 power decreased 5.4% to £79.95/MWh, while summer 25 fell 4.7% to £70.25/MWh.
Baseload electricity
Forward curve comparison
- Day-ahead power fell 3.2% to £83/MWh, finding bearish influence from lower gas prices, after warmer temperatures acted to reduce overall domestic gas-for-heating demand.
- October 24 power slipped 3.6% at £70.20/MWh and November 24 power decreased 5.8% to £79.60/MWh.
Annual October contract
- Q424 power moved 5.8% lower to £75.80/MWh.
- The annual October 24 contract lost 5.1% to £75.10/MWh, 31.3% lower than the same time last year (£109.25/MWh).
Peak electricity
Forward curve comparison
- Day-ahead peak power was down 12.7% to £76.40/MWh, following its baseload counterpart lower.
- October 24 peak power declined 4.0% at £78.50/MWh, and November 24 peak power decreased 4.9% to £96.50/MWh.
Annual October contract
- The annual October 24 peak power fell 3.9% to £88.38/MWh.
- This is 39.8% lower than the same time last year (146.75/MWh).
Seasonal power prices
Seasonal baseload power contracts
- All seasonal power contracts fell last week, down on average by 3.7%.
- winter 24 power decreased 5.4% to £79.95/MWh, while summer 25 fell 4.7% to £70.25/MWh.
Seasonal peak power curve
- Likewise, all seasonal peak power contracts declined last week, down 4.0% on average.
- Winter 24 and summer 25 peak power dropped 5.1% and 4.3% respectively, falling to £93.50/MWh and £76.25/MWh.
Commodity price movements
Oil and coal
- During the reporting period, Brent Crude oil observed sustained bullish movements, in contrast to the downward movements seen across August and September to date, rising 4.1% to average $73.70/bl.
- Despite concerns surrounding weak oil demand in China and the US, oil prices rose during the week following a decision by the US Federal Reserve to lower its benchmark interest rate by 0.5%.
- A lower interest rate decreases the cost of borrowing, which can increase economic activity among investors and consumers, thus raising the price of oil.
- In addition, a fall in US crude inventories as well as increased tensions across the Middle East contributed to this rise in oil prices, due to concerns over supply shortages.
- The oil market continues to be subject to a period of volatility, with the ongoing conflict in the Middle East in addition to concerns around oil demand in China and the US providing uncertainty over the future trajectory of oil prices.
Carbon (UK and EU ETS)
- The EU and UK ETS registered similar downward adjustments across the reporting period, with the EU ETS carbon falling 2.9%, in line with recent losses seen across September, and the UK ETS dropping 5.6% opposing recent increases seen since August.
- As a result, UK ETS carbon prices fell to below £40.00/t, for the first time since 14 August, reaching a monthly low of £39.11/t on 19 August.
- Lower gas prices across GB, in tandem with warmer weather acted to lower prices. However, stronger losses were limited by periods of reduced wind generation, acting to bolster gas-for-power requirements.
- EU carbon prices found bearish influence from above-average temperatures, and similar losses across Dutch TTF prices, however stronger losses were limited by reduced coal prices, making it cheaper to produce power via coal-fired generation.
- The upcoming compliance deadline on 30 September may lead to an increase in last-minute compliance purchases, increasing EUA prices.
Wholesale price snapshot – Friday-on Friday
