16 September 2022

Headlines

This week, we observed the continuation of downward price movements across most tracked wholesale gas and power contracts. EU intervention on the current energy crisis continues to provide bearish sentiment for prices. There were also some bearish pricing levers for GB specifically this week as follows. Subsqeuntly, day-ahead gas fell 24.6% to 260.00p/th, following system oversupply on multiple days, with steady flows of gas imports via our interconnectors and LNG deliveries in tandem. Day-ahead power fell 10.6% to £295.00/MWh, following its gas equivalent contract lower, coupled with periods of higher wind outturn seen at points during the week. Near-term bearish fundamentals influenced the price direction of contracts further out on the curve too. October 22 gas was down 14.7% at 341.04p/th, and November 22 gas decreased 4.7% to 473.73p/th. Most seasonal gas contracts declined this week, down by 4.0% on average, while both winter 22 and summer 23 gas dropped 2.4% and 4.9% respectively, subsiding to 512.45p/th and 448.70p/th. The majority seasonal power contracts declined this week too, down on average by 2.9%.

Baseload electricity

Forward curve comparison

  • Day-ahead power fell 10.6% to £295.00/MWh, following its gas equivalent contract lower, coupled with periods of recorded higher wind outturn.
  • October 22 power slipped 10.8% at £330.00/MWh and November 22 power decreased 7.7% to £600.00/MWh.

Annual October contract

  • Q422 power moved 9.9% lower to £485.00/MWh.
  • The annual October 22 contract lost 10.8% to £397/MWh, 387.1% higher than the same time last year (£81.5/MWh)

Peak electricity

Forward curve comparison

  • Day-ahead peak power was unchanged week-on-week, remaining at £390.50/MWh.
  • October 22 peak power gained 10.2% at £422.75/MWh, and November 22 peak power decreased 20.1% to £895.25/MWh.

Annual October contract

  • The annual October 22 peak power rose 10.6% to £560.25/MWh
  • This is 496.8% higher than the same time last year (93.88/MWh).

Seasonal power prices

Seasonal baseload power contracts

  • The majority of seasonal power contracts declined this week, down on average by 2.9%.
  • Winter 22 power decreased 8.5% to £503.00/MWh, whereas summer 23 increased 3.8% to £353.00/MWh.

Seasonal baseload power curve

  • Like baseload power, most seasonal peak power contracts declined this week, down 5.2% on average.
  • Winter 22 and summer 23 peak power dropped 15.3% and 0.6% respectively, falling to £720.25/MWh and £400.25/MWh.

Commodity price movements

Oil and coal

  • Brent crude prices lifted 1.0% this week to average $93.43/bl, reversing two previous consecutive weeks of average price decline.
  • Brent crude prices in the week were relatively mixed, with the front half of the week recording the most notable price rises, with more bearish sentiment introduced as the week progressed.
  • On Monday, reports of supply uncertainty as Iranian nuclear talks stalled and expectations of a EU embargo on Russian oil shipments in December saw prices climb higher. Added to this, reports also suggested that U.S. emergency oil stocks fell to their lowest level since 1984 in the previous week.

Carbon (UK and EU ETS)

  • EU and UK ETS prices saw mixed movements this week. EU ETS lifted 0.7% to average €70.71/t, whilst UK ETS carbon eased 7.1% to £78.19/t.
  • Prices for carbon remain volatile at a time where the uncertainty surrounding fossil fuel supply into Europe and the UK is uncertain.
  • The prospect of EU intervention in the market to shield consumers from rocketing wholesale prices could influence the direction for carbon prices going forward, particularly if power demand reduction is sought as a mechanism to soften prices as has been reported.

Wholesale price snapshot – Friday-on Friday

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