24 December 2021

Headlines

Near-term gas and power contracts moved lower this week ahead of the festive period. However, longer-term contracts continued to show gains. Day-ahead gas dropped 21.5% to 267.00p/th, with demand set to drop over the Christmas holiday period. Prices are still over 200.00p/th higher than the same time last year amid concerns over tight supplies, heightened following the reversal of gas flows between Russia and Germany via the Yamal pipeline. Month-ahead gas fell 19.6% to end the week at 273.14p/th; however, summer 22 gas jumped 16.8% to 231.42p/th and winter 22 gained 17.9% to 237.30p/th, reflecting concerns of prolonged tightness in the gas market. Power prices followed the movements in the gas market very closely. Day-ahead power fell 47.5% to £210.00/MWh, while the January 22 contract lost 29.2% to £340.00/MWh. Summer 22 power rose 14.8% to £210.00/MWh, while winter 22 power lifted 10.8% to £215.00/MWh. Brent crude oil slipped 0.5% to average $73.84/bl, with expectations of lowering demand as a result of renewed COVID-19 restrictions.

Baseload electricity
  • Day-ahead power dropped 47.5% to £210.00/MWh, following its gas counterpart lower.
  • January 22 power fell 29.2% to £340.00/MWh and February 22 power was unchanged at £440.00/MWh.
  • Q122 power lost 11.2% to £360.00/MWh.
  • The annual April 22 contract increased 12.7% to £212.50/MWh, 327.6% higher than the same time last year (£49.70/MWh), and 79.1% higher than the same time last month (£118.68/MWh).
Forward Curve Comparison

Annual April Contract

Peak electricity
  • Day-ahead peak power lost 55.2% to £235.00/MWh, following baseload power lower.
  • January 22 peak power fell 34.3% to £542.00, while February 22 peak power increased 18.1% to £797.00/MWh.
  • This week, the annual April 22 peak power contract rose 29.9% to £260.03/MWh.
  • This is 364.1% higher than the same time last year (£59.78/MWh), and 84.7% higher than the same time last month (£140.80/MWh).

Forward curve comparison

Annual April contract

Seasonal power prices

Seasonal baseload power contracts

Seasonal baseload power curve

  • All seasonal power contracts increased this week, up by 8.3% on average.
  • Summer 22 power gained 14.8% to £210.00/MWh and winter 22 power rose 10.8% to £215.00/MWh.
  • Seasonal peak power contracts jumped 36.9% on average this week.
  • The summer 22 peak contract leapt 33.0% to £241.45/MWh and winter 22 peak power climbed 27.2% to £278.60/MWh.
Commodity price movements

Oil and Coal

Carbon

  • Brent crude oil slipped 0.5% to average $73.84/bl, this week.
  • Prices were pushed lower by expectations of lowering demand as a result of renewed COVID-19 lockdown restrictions.
  • However, losses were capped by recent reports that the Omicron variant is less severe than Delta, providing hopes that re-imposed restrictions will not last as long as previous restrictons.
  • API 2 coal lifted 2.4% to average $126.50/t.
  • Carbon prices saw mixed movements this week, with the UK ETS rising 2.1% to average £76.85/t, whereas the EU ETS lost 3.1% to average €78.21/t.
  • UK ETS carbon prices continued to be supported by periods of low renewables output and high gas prices.
  • EU ETS prices were pushed lower by falling gas prices on the continent, following news that a number of LNG cargoes previously bound for Asia had been re-routed to North West Europe.
Wholesale price snapshot 

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