10 June 2022

Headlines

This week largely represented more bearish sentiment for wholesale gas and power contracts in GB, with some exceptions further along the forward curve. Subsequently, day-ahead gas fell 39.8% to 80.00p/th, weighed by elevated temperatures across the UK, coupled with higher Norwegian flows as maintenance works at Troll and Kollsnes gas fields ease. Day-ahead power dropped 35.7% to £90.00/MWh, following the strong downward movements from its equivalent gas contract, coupled with periods of higher wind generation in the week. Similarly, July 22 gas was down 9.2% at 151.25p/th, and August 22 gas decreased 4.0% to 178.08p/th. The majority of seasonal gas contracts declined this week too, down by 0.7% on average, while both winter 22 and summer 23 gas dropped 1.1% and 2.2% respectively, subsiding to 238.85p/th and 178.00p/th. Conversely, most seasonal power contracts boosted this week , up on average by 1.4%, as winter 22 power decreased 0.6% to £246.00/MWh, while summer 23 expanded 1.5% to £170.00/MWh.

Baseload electricity
  • Day-ahead power fell 35.7% to £90.00/MWh, following the strong downward movements from its equivalent gas contract, coupled with periods of higher wind generation in the week.
  • July 22 power slipped 5.4% at £165.00/MWh and August 22 power decreased 5.0% to £170.00/MWh.
  • Q322 power moved 3.6% lower to £185.00/MWh.
  • The annual October 22 contract rose 0.2% to £208/MWh, 241.7% higher than the same time last year (£60.88/MWh).
Forward Curve Comparison

Annual October Contract

Peak electricity
  • Day-ahead peak power was down 34.5% to £95.00/MWh, following baseload power lower.
  • July 22 peak power declined 3.2% at £174.35/MWh, and August 22 peak power decreased 0.5% to £185.5/MWh.
  • The annual October 22 peak power rose 0.5% to £252.23/MWh
  • This is 257.0% higher than the same time last year (70.65/MWh).

Forward curve comparison

Annual October contract

Seasonal power prices

Seasonal baseload power contracts

Seasonal baseload power curve

  • The majority of seasonal power contracts saw gains this week, rising on average by 1.4%.
  • Summer 23 expanded 1.5% to £170.00/MWh and winter 23 climbed 1.6% to £189.00/MWh
  • Most seasonal peak power contracts were largely unchanged this week.
  • Winter 22 and summer 23 peak power dropped 0.2% and 1.0% respectively, falling to £308.05/MWh and £196.40/MWh.
Commodity price movements

Oil and Coal

Carbon

  • Brent crude prices rose 2.0% this week to average $121.86/bl.
  • The prospect of an EU-wide embargo on Russian oil continued to outweigh demand concerns this week. Similarly, the back-drop of a globally tightened brent crude market continued to provide a strong foundation of ongoing price support.
  • Elsewhere, reports that Chinese lockdown restrictions have begun to subside further, eased future demand fears.
  • However, price growth was capped by reports Russia has ramped up its oil exports to offset on-going sanctions.
  • API 2 coal fell 3% to average $226.40/t.
  • The UK ETS slipped 1.0% to average £81.92/t, while the EU ETS fell 3.0% to average €82.02/t over the week. Both the UK and EU ETS carbon markets remain sensitive to change.
  • EU ETS carbon prices retracted as the European Parliament committee met on Wednesday 8 June to vote on market reforms of the EU ETS.
  • In an effort to bolster carbon prices and spur industry to switch to greener energy, the EU’s executive European Commission has proposed a plan to remove hundreds of millions of surplus carbon allowances (EUAs) from the EU ETS from 2021. An outcome was not met from this meeting to date, so we await the verdict of this.
Wholesale price snapshot 

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