Headlines
This week saw the continuation of lowering gas and power prices, moving down further from bearish price points set before the Christmas break. Despite a relative ‘pick-up’ in demand as we exit the festive period and industry resumes, prices remain in-line with recent levels. The continuation of milder temperatures has helped suppress demand, with this trend being reflected in lower wholesale prices. In support of this, day-ahead gas fell 7.9% to 164.00p/th, driven in part by the aforementioned warmer weather and strong LNG volumes continuing to reach the UK in the early part of 2023. Day-ahead power fell 13.1% to £139.00/MWh, following the bearish price movements of its equivalent gas contract, combined with the continuation of elevated and consistent levels of wind output. Similarly, February 23 gas was down 3.6% at 185.00p/th, and March 23 gas decreased 1.2% to 186.00p/th. All tracked seasonal gas contracts declined last week, down by 10.8% on average, while both summer 23 and winter 23 gas dropped 7.1% and 5.4% respectively. Like gas, all seasonal power contracts declined this week, down on average by 6.6%.
Baseload electricity
Forward curve comparison
- Day-ahead power fell 13.1% to £139.00/MWh, following its gas equivalent contract lower, coupled with on-going elevated levels of wind outturn, softening system margins.
- February 23 power slipped 9.5% to £190.00/MWh and March 23 power increased 3.1% to £185.00/MWh.
Annual October contract
- Q223 power moved 10.5% lower to £188/MWh.
- The annual April 23 contract lost 7.2% to £205.88/MWh, 85.5% higher than the same time last year (£111.00/MWh).
Peak electricity
Forward curve comparison
- Day-ahead peak power was up 3.4% to £164.40/MWh, despite losses in the equivalent baseload power contract.
- February 23 peak power declined 12.6% at £233.81/MWh, and March 23 peak power decreased 41.1% to £191.33/MWh.
Annual October contract
- The annual April 23 peak power rose 10.2% to £261.45/MWh
- This is 206.2% higher than the same time last year (85.38/MWh).
Seasonal power prices
Seasonal baseload power contracts
- All seasonal power contracts declined this week, down on average by 6.6%.
- Summer 23 power decreased 8.4% to £187.75/MWh, while winter 23 fell 6.1% to £224.00/MWh.
Seasonal baseload power curve
- Unlike baseload, most seasonal peak power contracts boosted this week, up 28.7% on average.
- Summer 23 gas increased 60.3% to £212.40/MWh, while winter 23 peak power dropped 3.0% to £310.50/MWh.
Commodity price movements
Oil and coal
- Brent crude prices fell week-on-week, down 2.2% to average $81.18/bl, continuing the period of prolonged price decline set before Christmas.
- Uncertainty in global commodity markets continue to exacerbate volatility in price, particularly evident over recent months.
- This week in particular, we can attribute price decline, at least in part, to some concerns over an impending economic slowdown.
- Elsewhere, concerns continue to arise over lockdown restrictions in China, which is affecting the profile of oil demand in the country. Importantly, China is one of the top crude oil consumers globally.
Carbon (UK and EU ETS)
- EU and UK ETS prices saw bearish price movements this week. EU ETS dropped 5.6% to average €80.54/t, while UK ETS carbon decreased 1.7% to £69.58/t.
- In recent weeks, much of the North-west Europe and the UK has experienced high levels of wind and renewable outturn, easing demand on fossil fuel fired assets to meet demand. Consequently, the demand for EUA’s has subsided.
- Similarly, warmer trending weather is also contributing to lower trending demand in both geographies.
Wholesale price snapshot – Friday-on Friday
