14 January 2022

Headlines

Generally, this week represented a predominately bearish sentiment for gas and power prices, with some exceptions on day-ahead contracts. In keeping with the largely downward movement of prices, day-ahead gas fell 4.4% to 217.00p/th, following periods of warmer weather stifling heating demand, a trend expected to extend into next week too. Increased LNG deliveries into UK terminals also increased LNG send-out and eased the current tight gas supply picture slightly. Day-ahead power rose to the contrary, up 11.2% to £239.00/MWh, with much lower periods of wind generation observed, set to continue across much of next week. Font-month contracts saw pronounced losses, with February 22 gas down 8.4% at 216.39p/th, and March 22 gas lowering 8.0% to 213.93p/th. Most seasonal gas contracts declined this week, down by 7.9% on average, with both summer 22 and winter 22 gas dropping 15.0% and 14.2% respectively, subsiding to 174.66p/th and 182.61p/th. This bearish trend was shared with seasonal power contracts, down on average by 7.0%, as summer 22 power decreased 11.6% to £164.00/MWh, while winter 22 fell 13.0% to £174.00/MWh.

Baseload electricity
  • Day-ahead power rose 11.2% to £239.00/MWh, following periods of low wind outturn in the week.
  • February 22 power slipped 17.5% at £228.05/MWh and March 22 power decreased 2.8% to £207/MWh.
  • Q222 power moved 10.9% lower to £168.00/MWh.
  • The annual April 22 contract lost 12.3% to £169.00/MWh, 236.3% higher than the same time last year (£50.26/MWh).
Forward Curve Comparison

Annual April Contract

Peak electricity
  • Day-ahead peak power was up 12.5% to £270.00/MWh, following baseload power higher.
  • February 22 peak power declined 40.7% at £255/MWh, and March 22 peak power decreased 11.4% to £195.00/MWh.
  • The annual April 22 peak power rose 14.4% to £185.00/MWh
  • This is 225.2% higher than the same time last year (56.88/MWh).

Forward curve comparison

Annual April contract

Seasonal power prices

Seasonal baseload power contracts

Seasonal baseload power curve

  • Most seasonal power contracts declined this week, down on average by 7.0%.
  • Summer 22 power decreased 11.6% to £164.00/MWh, while winter 22 fell 13.0% to £174.00/MWh.
  • The majority of seasonal peak power contracts declined this week, down 1.4% on average.
  • Summer 22 and winter 22 peak power dropped 14.1% and 14.6% respectively, falling to £170.00/MWh and £200.00/MWh.
Commodity price movements

Oil and Coal

Carbon

  • Brent crude prices climbed again this week, up 3.8% to average $83.59/bl.
  • Prices still remain sensitive to any bearish sentiment in the market surrounding the Omicron coronavirus variant, with cases continuing to rise across many major economies, particularly in Europe.
  • However, some upward pressure was placed on Brent crude prices this week which ultimately saw prices climb from the week prior.
  • Tight market supply continues to provide a strong foundation of price support.
  • Carbon prices saw bearish movements this week. The UK ETS which fell 5.0% to £72.15/t. The EU ETS market mirrored these trends, down 4.3% to €81.58/t.
  • Milder weather in the UK has subdued gas fired generation significantly, with less demand for EUA’s to cover increased emissions from thermal plant.
  • Additionally, delays to EUA auctions ended this week, with the reintroduction of EUA’s back into the market, increasing market supply.
Wholesale price snapshot 

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