21 October 2022

Headlines

This week saw the continuation of lowering wholesale gas and power prices, a trend that has been consistent across much of October to date. A consistent level of LNG supply has helped bring down near-term gas prices, with the day-ahead contract falling to >16 month lows (40.00p/th, 18 October). Week-on-week, day-ahead gas fell 28.0% to 90.00p/th, following softened demand, amid milder temperatures, and increased levels of LNG imports into GB. Day-ahead power fell 33.3% to £100.00/MWh, mirroring the losses seen from its equivalent gas contract and driven lower by higher wind output seen during the week. November 22 gas was down 22.0% at 209.00p/th, and December 22 gas decreased 12.2% to 360.00p/th. Like near-term contracts, forward seasonal gas contracts declined this week too, down by 5.6% on average, with summer 23 gas and winter 23 gas dropping 7.6% and 5.8% respectively, subsiding to 340.00p/th and 355.00p/th. Elsehwere, most seasonal power contracts declined this week, down on average by 3.3%, as summer 23 power decreased 4.9% to £290.00/MWh, while winter 23 fell 4.5% to £315.00/MWh.

Baseload electricity

Forward curve comparison

  • Day-ahead power fell 33.3% to £100.00/MWh, following the strong bearish movements of its equivalent gas contract and periods of higher wind output seen across the week.
  • November 22 power slipped 36.6% to £260.00/MWh and December 22 power decreased 23.3% to £460.00/MWh.

Annual October contract

  • Q123 power moved 14.1% lower to £640.00/MWh.
  • The annual April 23 contract lost 4.7% to £302.5/MWh, but remaining 260.6% higher than the same time last year (£83.88/MWh).

Peak electricity

Forward curve comparison

  • Day-ahead peak power was down 13.0% to £166.25/MWh, following baseload power lower.
  • November 22 peak power declined 44.1% at £391.25/MWh, and December 22 peak power decreased 18.1% to £770.25/MWh.

Annual October contract

  • The annual April 23 peak power rose 1.9% to £386.75/MWh
  • This is 384.0% higher than the same time last year (79.9/MWh).

Seasonal power prices

Seasonal baseload power contracts

  • Most seasonal power contracts declined this week, down on average by 3.3%.
  • Summer 23 power decreased 4.9% to £290.00/MWh, while winter 23 fell 4.5% to £315.00/MWh.

Seasonal baseload power curve

  • Unlike baseload, seasonal peak power contracts boosted this week, up 2.0% on average.
  • Summer 23 and winter 23 peak power increased 2.5% and 1.5% respectively, rising to £342.25/MWh and £431.25/MWh.

Commodity price movements

Oil and coal

  • Brent crude prices slipped 2.9% to average $91.70/bl. This week, Brent crude prices reversed two consecutive weeks of average price rises, despite US crude stocks decreasing, reflecting ongoing volatility in commodity markets, with inflation and recession fears weighing on prices
  • On Thursday 20 October, most strikes at TotalEnergies French refinery and storage sites were ended, with only two of the five previously affected sites still experiencing strike action from its workforce

Carbon (UK and EU ETS)

  • EU and UK ETS prices saw mixed movements this week. EU ETS rose 0.4% to average €67.49/t, whilst UK ETS carbon retracted 3.6% to £69.54/t.
  • UK ETS prices were weighed on by current milder weather in the UK against seasonal normal averages, reducing the demand for gas and fossil fuel fired assets to meet demand needs
  • EU ETS carbon markets saw limited trading activity in the week

Wholesale price snapshot – Friday-on Friday

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