Headlines
Most tracked gas and power contracts registered losses across the previous week, predominantly driven by periods of strong wind generation in the latter half of the week due to Storm Lillian acting to reduce gas-for-power reliance. Despite this, day-ahead gas prices on 23 August rose 9.1% compared to the prices seen on 16 August, to 86.73p/th due to projections of lower wind generation on 26 August. Day-ahead power fell 18.4% to £57.42/MWh, finding bearish influence from high levels of interconnector flows from mainland Europe, in tandem with strong domestic nuclear production, and high wind generation. Longer term gas prices found bearish influence from strong EU gas storage stocks, with data from Gas Infrastructure Europe outlining that the EU reached its 90% gas storage target on August 19 – ahead of the mandated deadline of November 1. As a result, September 24 gas was down 7.2% at 88.38p/th, and October 24 gas decreased 9.3% to 90.63p/th. Furthermore, all seasonal gas contracts declined last week, down by 5.9% on average, with both winter 24 and summer 25 gas dropped 6.6% and 6.3% respectively, subsiding to 103.55p/th and 97.75p/th. Similarly, all seasonal power contracts declined, down on average by 4.3%, as winter 24 power decreased 6.0% to £89.70/MWh, and summer 25 fell 4.3% to £79.25/MWh.
Baseload electricity
Forward curve comparison
- Day-ahead power fell 18.4% to £57.42/MWh, following its gas counterpart lower due to periods of high wind generation across the week.
- September 24 power slipped 5.5% at £76.25/MWh and October 24 power decreased 5.4% to £77.45/MWh.
Annual October contract
- Q424 power moved 6.3% lower to £86.25/MWh.
- The annual October 24 contract lost 5.2% to £84.48/MWh, which was 29.0% lower than the same time last year (£119.00/MWh).
Peak electricity
Forward curve comparison
- Day-ahead peak power was up 41.6% to £82.50/MWh, opposing its baseload counterpart.
- September 24 peak power declined 4.7% at £82.75/MWh, and October 24 peak power decreased 3.9% to £84.95/MWh.
Annual October contract
- The annual October 24 peak power fell 4.2% to £97.70/MWh.
- This is 37.6% lower than the same time last year (156.50/MWh).
Seasonal power prices
Seasonal baseload power contracts
- All seasonal power contracts fell last week, down on average by 4.3%.
- Winter 24 power decreased 6.0% to £89.70/MWh, while summer 25 fell 4.3% to £79.25/MWh.
Seasonal peak power curve
- All Seasonal peak power contracts declined last week, down 4.2% on average.
- Winter 24 and summer 25 peak power dropped 5.3% and 4.0% respectively, falling to £104.10/MWh and £85.15/MWh.
Commodity price movements
Oil and coal
- Brent crude oil saw bearish movements across the reporting period, opposing the recent bullish movements that had been seen across the previous week, dropping 3.1% to average $78.03/bl.
- The losses were the result of continued ceasefire talks across the week, providing hope that the conflict across the Middle East would end, leading to a drop in the geopolitical risk premium associated with the conflict.
- Moreover, a weak Chinese economy has led to lower consumption from the largest global crude oil importer, limiting price gains.
- However, stronger losses were limited by a decrease in US crude oil stockpiles, down 4.6 million barrels a week in the week ending 18 August, suggesting robust summer demand across the country, keeping prices elevated despite the previously mentioned bearish drivers.
Carbon (UK and EU ETS)
- Both UK and EU carbon prices saw gains across the week, with gains across EU carbon prices supported by lower coal prices, increasing the economic incentive to generate using coal-fired generation, and bolstering total EUA demand. EU ETS carbon rose 0.6% to average €72.45/t, and UK ETS carbon grew 2.9% to average £40.60/t.
- Much like EU carbon prices, UK carbon prices found bullish influence from periods of gas price uncertainty, reaching a monthly high of £40.93/t on 20 August, in tandem with periods of low wind generation at the beginning of the week acting to increase demand for more carbon intensive forms of power generation.
- However, stronger losses were limited by the arrival of Storm Lillian in the latter half of the reporting period, which bolstered wind generation and decreased reliance on more carbon-intensive power generation.
Wholesale price snapshot – Friday-on Friday
