23 December 2022

Headlines

This week saw the continuation of lowering gas and power prices, moving down further from bearish price points set a fortnight ago. As we head to the Christmas period, demand is generally trending lower with the closure of industrial plant. Similarly, we are also observing slightly warmer temperatures compared with recent weeks which is also supressing demand slightly. Subsequently, day-ahead gas fell 41.8% to 173.00p/th, following much milder weather, lower demand levels and a steady supply of LNG continuing to reach UK shores. Day-ahead power fell 25.3% to £145.00/MWh, following the bearish movements of its equivalent gas contract. January 23 gas was down 31.7% at 209.00p/th, and February 23 gas decreased 30.1% to 217.50p/th. All seasonal gas contracts declined last week, down by 19.5% on average, as summer 23 and winter 23 gas dropped 25.8% and 24.6% respectively, subsiding to 224.00p/th and 238.00p/th. Like gas, all seasonal power contracts declined this week, down on average by 17.3%. Summer 23 power decreased 21.9% to £216.00/MWh, while winter 23 fell 19.3% to £246.00/MWh.

Baseload electricity

Forward curve comparison

  • Day-ahead power fell 25.3% to £145.00/MWh, following the bearish price direction of its equivalent gas contract, and lower trending demand heading into the Christmas period.
  • January 23 power slipped 20.3% to £247.00/MWh and February 23 power decreased 23.7% to £248.00/MWh.

Annual October contract

  • Q123 power moved 28.6% lower to £223.00/MWh.
  • The annual April 23 contract lost 20.6% to £231.00/MWh, but remains 110.0% higher than the same time last year (£110.00/MWh).

Peak electricity

Forward curve comparison

  • Day-ahead peak power was down 44.5% to £167.25/MWh, following baseload power lower.
  • January 23 peak power declined 35.8% to £345.60/MWh, and February 23 peak power decreased 34.5% to £352.46/MWh.

Annual October contract

  • The annual April 23 peak power rose 19.2% to £304.25/MWh.
  • This is 147.9% higher than the same time last year (£122.73/MWh).

Seasonal power prices

Seasonal baseload power contracts

  • All seasonal power contracts declined this week, down on average by 17.3%.
  • Summer 23 power decreased 21.9% to £216.00/MWh, while winter 23 fell 19.3% to £246.00/MWh.

Seasonal baseload power curve

  • Like baseload, all seasonal peak power contracts declined this week, down 19.5% on average.
  • Summer 23 and winter 23 peak power dropped 22.5% and 16.5% respectively, falling to £258.25/MWh and £350.25/MWh.

Commodity price movements

Oil and coal

  • Brent crude prices rose week-on-week, up 2.2% to average $81.35/bl, after five previous consecutive week of price decline.
  • Uncertainty in global commodity markets continue to exacerbate volatility in price, particularly evident over recent months.
  • This week in particular, we can attribute price rises, at least in part, to some optimism surrounding future demand heading into 2023.
  • Softer Covid-19 lockdown restrictions in China are also contributing to this optimism, recognising China is the largest importer of crude oil globally.

Carbon (UK and EU ETS)

  • EU and UK ETS prices saw bullish price movements this week. EU ETS climbed 1.1% to average €88.13/t, while UK ETS carbon increased 1.7% to £73.45/t.
  • Uncertainty in global commodity markets continue to exacerbate volatility in price, particularly evident over recent months.
  • The current pause in daily auctions is providing a level of support to prices, particularly for the European carbon market.
  • Generally colder weather in the winter months is also contributing to higher gas and fossil fuelled fired demand too, despite warmer temperatures of late.

Wholesale price snapshot – Friday-on Friday

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