04 November 2022

Headlines

This week saw the continuation of predominately bearish price trends across gas and power wholesale contracts, noting however the marked disparity between day-ahead contracts and those further out on the forward curve. Lowering levels of wind outturn seen as the week matured, coupled with colder temperatures after a markedly warm October encouraged strong price rises on day-ahead gas and power contracts this week. Day-ahead gas rose 74.4% to 109.00p/th, driven in part by some of the aforementioned market fundamentals. Like gas, day-ahead power rose 10.5% to £105.00/MWh, following the strong upward movements of its equivalent gas contract. Elsewhere, December 22 gas was down 15.0% at 301.00p/th, and January 23 gas decreased 8.3% to 336.50p/th. All seasonal gas contracts declined this week, down by 7.1% on average, a potential response to the strong booked volumes of LNG reaching UK and European terminals, easing some of the future gas supply concerns in the medium-term. Likewise, seasonal power contracts declined this week, down on average by 5.9%, as summer 23 power decreased 10.0% to £270.00/MWh, while winter 23 fell 4.8% to £300.00/MWh.

Baseload electricity

Forward curve comparison

  • Day-ahead power rose 10.5% to £105.00/MWh, following marked gains from its equivalent gas contract and declining wind outturn as the week progressed.  
  • However, December 22 power slipped 11.1% to £335.00/MWh and January 23 power decreased 7.3% to £675.00/MWh.

Annual October contract

  • Q123 power moved 4.0% lower to £555.00/MWh.
  • The annual April 23 contract lost 7.3% to £285.00/MWh, 258.5% higher than the same time last year (£79.5/MWh).

Peak electricity

Forward curve comparison

  • Day-ahead peak power was up 60.0% to £180.00/MWh, following baseload power higher.
  • To the contrary, December 22 peak power declined 34.4% to £440.00/MWh, and January 23 peak power decreased 16.9% to £1085.00/MWh.

Annual October contract

  • The annual April 23 peak power rose 1.0% to £358.25/MWh.
  • This is 273.4% higher than the same time last year (£95.93/MWh).

Seasonal power prices

Seasonal baseload power contracts

  • All seasonal power contracts declined this week, down on average by 5.9%.
  • Summer 23 power decreased 10.0% to £270.00/MWh, while winter 23 fell 4.8% to £300.00/MWh.

Seasonal baseload power curve

  • Like baseload, all seasonal peak power contracts declined this week, down 0.9% on average.
  • Summer 23 and winter 23 peak power dropped 0.6% and 1.3% respectively, falling to £310.50/MWh and £406.00/MWh.

Commodity price movements

Oil and coal

  • Brent crude prices climbed 1.1% to average $95.12/bl, a second consecutive week of average price rises.
  • The predominant lever of price rises for Brent crude remains centered around 2mn/bpd cuts from 1 November introduced by OPEC .
  • Elsewhere, reports have emerged that the G7 and Australia have agreed to set a fixed rate price when they ultimately finalise a price cap on Russia oil (expected to be later in November).

Carbon (UK and EU ETS)

  • EU and UK ETS prices saw collective bullish movements this week. EU ETS rose 4.0% to average €78.06/t, whilst UK ETS carbon increased 0.5% to £75.33/t.
  • We continue to also observe strong bullish momentum on the EUA Dec-22 contract, providing some bullish sentiment to prices in the near-term.
  • Carbon prices, both in a European and UK setting continue to respond to uncertainty surrounding fossil fuel imports from Russia this winter and will play a part in the price movement of carbon prices.

Wholesale price snapshot – Friday-on Friday

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