13 January 2023

Headlines

This week, we continued to broadly observe the downturn of wholesale gas and power prices, with outliers being day-ahead contracts. Recent milder weather has eased demand in the UK, allowing prices to soften. Added to this, the present gas storage picture on the continent remains strong. Withdrawals over the winter period have been less intensive, with thanks to the milder weather. European storage levels were c30% higher compared to last year as of 30 December, and 12% higher than the equivalent 5-year average. However, day-ahead gas rose 1.2% to 166.00p/th, with some short-lived periods of system undersupply. Day-ahead power rose 18.7% to £165.00/MWh, amid lowering wind outturn forecasts for early next week. February 23 gas was down 11.9% at 163.00p/th, and March 23 gas decreased 11.8% to 164.00p/th. All seasonal gas contracts declined last week, down by 4.7% on average. Like gas, all seasonal power contracts declined this week, down on average by 10.6%, as summer 23 power decreased 14.2% to £161.00/MWh, while winter 23 fell 12.5% to £196.00/MWh.

Baseload electricity

Forward curve comparison

  • Day-ahead power rose 18.7% to £165.00/MWh, after a relatively bearish week overall, but outweighed by strong recorded gains on Friday 13 January, influenced by low wind output forecast for Monday.
  • February 23 power slipped 13.2% to £165.00/MWh and March 23 power decreased 11.4% to £164.00/MWh.

Annual October contract

  • Q223 power moved 14.1% lower to £161.50/MWh.
  • The annual April 23 contract lost 12.6% to £180.00/MWh, 68.2% higher than the same time last year (£107.00/MWh).

Peak electricity

Forward curve comparison

  • Day-ahead peak power was up 26.5% to £183.40/MWh, following baseload power higher.
  • February 23 peak power declined 10.4% to £209.40/MWh, and March 23 peak power increased 1.0% to £193.25/MWh.

Annual October contract

  • The annual April 23 peak power rose 10.7% to £233.35/MWh.
  • This is 145.0% higher than the same time last year (£95.25/MWh).

Seasonal power prices

Seasonal baseload power contracts

  • All tracked seasonal power contracts declined this week, down on average by 10.6%.
  • Summer 23 power decreased 14.2% to £161.00/MWh, while winter 23 fell 12.5% to £196.00/MWh.

Seasonal baseload power curve

  • Like baseload, all seasonal peak power contracts declined this week, down 10.8% on average.
  • Summer 23 and winter 23 peak power dropped 10.9% and 10.7% respectively, falling to £189.30/MWh and £277.40/MWh.

Commodity price movements

Oil and coal

  • Brent crude prices climbed marginally week-on-week, up 0.9% to average $81.94/bl.
  • Future Chinese demand growth has registered signs of improvements, recognising China as of the largest crude importing countries, supported further by steadily relaxing national COVID restrictions.
  • A recorded slowdown in US interest rates also supported prices as the week matured.
  • However, we do recognise that the current global oil market remains volatile, particularly with fears of an impending global recession and subsequent concerns over future global demand.

Carbon (UK and EU ETS)

  • EU and UK ETS prices saw bearish price movements this week, for a second consecutive week. EU ETS dropped 0.7% to average €80.00/t, while UK ETS carbon decreased 3.3% to £67.31/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. This trend also contributed to Friday 13 January’s price points for EUA’s outturning at their lowest levels of the week.
  • Similarly, warmer trending weather is also contributing to lower trending demand in both geographies.

Wholesale price snapshot – Friday-on Friday

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