13 May 2022

Headlines

Wholesale gas and power prices continued on trend this week, with on-going volatility across both markets – with losses observed across most near-term contracts, with some gains observed further along the forward curve. Day-ahead gas fell 23.1% to 50.00p/th, following the continuation of much warmer weather across the UK, supressing domestic heating demand, coupled with higher LNG send-out amid an influx of cargoes reaching UK terminals this week. Day-ahead power fell 5.3% to £90.00/MWh, mirroring bearish trends set from its gas counterpart. June 22 gas was up 5.0% at 155.00p/th, whereas July 22 gas decreased 1.4% to 182.00p/th. Most seasonal gas contracts declined last week too, down by 2.7% on average, with summer 23 gas droppping 2.1% to 183.00p/th. Most seasonal power contracts declined this week, down on average by 0.7%, as winter 22 power expanded 1.3% to £245.25/MWh, while summer 23 fell 2.9% to £170.00/MWh. Elsewhere, carbon markets saw mixed movements across both the EU and UK ETS markets. The UK ETS recorded price growth on the week prior, up 5.5% to average £87.54/t, with the EU ETS falling 0.5% to €88.19/t.

Baseload electricity
  • Day-ahead power fell 5.3% to £90.00/MWh, weighed on by gas prices and strong renewable output across the week.
  • June 22 power climbed 2.4% at £171.00/MWh and July 22 power decreased 4.1% to £189.00/MWh.
  • Q322 power moved 3.7% lower to £207.00/MWh.
  • The annual October 22 contract lost 0.4% to £207.63/MWh, 222.4% higher than the same time last year (£64.41/MWh).
Forward Curve Comparison

Annual April Contract

Peak electricity
  • Day-ahead peak power was down reminaned unchaged at £110.00/MWh.
  • June 22 peak power declined 0.8% at £193.05/MWh, and July 22 peak power decreased 2.9% to £213.35/MWh.
  • The annual October 22 peak power rose 4.4% to £259.4/MWh
  • This is 266.5% higher than the same time last year (70.78/MWh).

Forward curve comparison

Annual April contract

Seasonal power prices

Seasonal baseload power contracts

Seasonal baseload power curve

  • The majority of seasonal power contracts declined this week, down on average by 0.7%.
  • Winter 22 power grew 1.3% to £245.25/MWh, while summer 23 fell 2.9% to £170.00/MWh.
  • Most seasonal peak power contracts increased this week, up 1.5% on average.
  • Winter 22 and summer 23 peak power went up 6.9% and 0.7% respectively, rising to £319.70/MWh and £199.10/MWh.
Commodity price movements

Oil and Coal

Carbon
  • Brent crude prices fell 2.5% this week to average $106.87/bl.
  • Brent crude prices endured a relatively turbulent week of price movement, with conflicting market fundamentals altering the price direction.
  • However, on-going market volatility and news China has continued with a large-scale lockdown policy across Beijing and Shanghai after climbing Covid-19 infection rates unsettled the market – with China being the world’s largest oil import country.
  • A stronger US dollar also weighed on prices, offsetting reports of a possible EU oil embargo on Russia.
  • Carbon markets saw mixed movements across both the EU and UK ETS markets. UK ETS carbon lifted 5.5% to average £87.54/t, reaching a new all-time high of £89.70/t on Friday, buoyed by the potential for further EU sanctions on Russian energy imports.
  • While, EU ETS fell 0.5% to €88.19/t.
  • Carbon markets generally remain relatively volatile, given the wider uncertainty across much of the European wholesale landscape at present. Warmer weather as we approach the peak summer period naturally stifles gas demand and lowers EUA demand in turn.
  • For the UK ETS more specifically, increased and relatively consistent levels of trading activity helped UK ETS prices climb slightly in the week.
Wholesale price snapshot 

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