28 October 2022

Headlines

This week saw the continuation of lowering gas and power wholesale prices as an overarching trend, with some exceptions to this on specific contracts. The bearish sentiment surrounding wholesale prices more recently can be attributed to the steady influx of LNG reaching UK and European import terminals, coupled with well stocked European gas storage levels (close to 100% fullness) as well as one of the mildest October’s on record, reducing demand. As a result, day-ahead gas fell 30.6% to 62.50p/th, amid the continuation of milder weather, suppressing demand, coupled with a steady stream of UKCS and Norwegian gas flows into GB. Like gas, day-ahead power fell 5.0% to £95.00/MWh, largely mirroring the losses seen in its equivalent gas contract. Elsewhere, November 22 gas was up 7.7% at 225.00p/th, whereas December 22 gas decreased 1.7% to 354.00p/th. All seasonal gas contracts declined this week, down by 3.2% on average, with summer 23 and winter 23 gas dropping 4.4% and 0.8% to 325.00p/th and 352.00p/th, respectively. Most seasonal power contracts declined this week, down on average by 0.2%, as summer 24 power reduced 4.3% to £220.00MWh while winter 23 remained unchanged at £315.00/MWh.

Baseload electricity

Forward curve comparison

  • Day-ahead power fell 5.0% to £95.00/MWh, with losses on the day-ahead gas contract and higher wind generation seen throughout the week.
  • November 22 power climbed 1.9% to £265.00/MWh and December 22 power decreased 18.0% to £377.00/MWh.

Annual October contract

  • Q123 power moved 9.7% lower to £578.00/MWh.
  • The annual April 23 contract rose 1.7% to £307.50/MWh, 289.2% higher than the same time last year (£79.00/MWh).

Peak electricity

Forward curve comparison

  • Day-ahead peak power was down 32.3% to £112.50/MWh, following baseload power lower.
  • November 22 peak power declined 20.2% to £312.25/MWh, and December 22 peak power decreased 13.0% to £670.25/MWh.

Annual October contract

  • The annual April 23 peak power rose 6.5% to £361.75/MWh.
  • This is 352.8% higher than the same time last year (£79.90/MWh).

Seasonal power prices

Seasonal baseload power contracts

  • Most seasonal power contracts declined this week, down on average by 0.2%.
  • Summer 24 power reduced 4.3% to £220.00MWh whereas winter 23 remained unchanged at £315.00/MWh.

Seasonal baseload power curve

  • Similar to baseload, seasonal peak power contracts declined this week, down 6.5% on average.
  • Summer 23 and winter 23 peak power dropped 8.8% and 4.6% respectively, falling to £312.25/MWh and £411.25/MWh.

Commodity price movements

Oil and coal

  • Brent crude prices climbed 2.6% to average $94.13/bl, after registering losses two-weeks ago. The price movement of Brent crude continues to remain particularly volatile, with conflicting price drivers.
  • The predominant lever of price rises for Brent crude remains centered around 2mn/bpd cuts from 1 November introduced by OPEC to combat the potential downturn in demand should a global financial recession emerge.

Carbon (UK and EU ETS)

  • EU and UK ETS prices saw collective bullish movements this week. EU ETS rose 11.2% to average €75.04/t, whilst UK ETS carbon increased 7.8% to £74.94/t.
  • For the EU ETS, supportive price signals from upcoming weather forecasts have helped prices climb higher in the week. Particularly looking towards the mid-point of November, forecasts project lower wind averages coupled with colder weather against seasonal averages – supporting demand for gas and fossil fuel fired assets to help meet demand.

Wholesale price snapshot – Friday-on Friday

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