3 December 2021

Headlines

This week had yet another predominately bullish stance, with strong gains made across most gas contracts, including further along the forward curve. Similarly, power prices enjoyed consistent growth from the week previous, with losses on the day-ahead power contract the notable outlier. Day-ahead gas rose 3.1% to 232.00p/th, gaining support from the continuation of colder temperatures bringing with it higher heating demand. In contrast, day-ahead power fell 46.6% to £227.00/MWh, with a strong and relatively consistent week of wind generation. January 22 gas was up 1.4% at 233.50p/th, and February 22 gas increased 2.9% to 234.25p/th. Most seasonal gas contracts boosted last week, up by 3.5% on average, while both summer 22 and winter 22 gas increased 6.6% and 5.4% respectively, lifting to 118.20p/th and 120.25p/th. Similar movements were seen for seasonal power contracts, rising on average by 2.4%, as summer 22 and winter 22 expanded 3.4% and 1.2% respectively, growing to £118.75/MWh and £124.00/MWh.

Baseload electricity
  • Day-ahead power fell 46.6% to £227/MWh, owing to stronger wind generation seen more broadly across the week.
  • January 22 power climbed 9.1% at £300.00/MWh and February 22 power increased 3.7% to £270.00/MWh.
  • Q122 power moved 1.1% higher to £255.00/MWh.
  • The annual April 22 contract rose 2.3% to £121.38/MWh, 152.0% higher than the same time last year (£48.17/MWh).
Forward Curve Comparison

Annual April Contract

Peak electricity
  • Day-ahead peak power was down 48.0% to £320.00/MWh, following baseload lower.
  • January 22 peak power declined 4.6% at £425.00/MWh, and February 22 peak power decreased 2.2% to £385.00/MWh.
  • The annual April 22 peak power rose 4.0% to £146.42/MWh.
  • This is 176.3% higher than the same time last year (52.99/MWh).

Forward curve comparison

Annual April contract

Seasonal power prices

Seasonal baseload power contracts

Seasonal baseload power curve

  • All seasonal power contracts rose this week, up on average by 2.4%.
  • Summer 22 and winter 22 expanded 3.4% and 1.2% respectively, rising to £118.75/MWh and £124.00/MWh.
  • Most seasonal peak power contracts declined this week, down 7.8% on average.
  • Summer 22 peak power dropped 0.4% to £130.00/MWh, while winter 22 peak power increased 7.8% to £162.84/MWh.
Commodity price movements

Oil and Coal

Carbon

  • Brent crude prices fell 9.5% from the previous week to average $72.35/bl. Prices still remain ~50% higher than the same time a year prior.
  • A generally bearish sentiment continues to provide downwards pressure on prices, a trend seen more broadly across the last month.
  • The emergence of the new Omicron variant has generated a relative degree of nervousness in the market, with fears rising infection rates across much of Europe and other major economies will prompt new lockdown restrictions and subsequently dampen demand.
  • Carbon prices saw strong gains last week, with UK ETS prices up 4.5% to 70.51/t. The EU ETS mirrored these trends, up 8.2% to €76.46/t. The EU ETS also reached a record high of €79.69/t on 2 December.
  • A cold weather front making its way across much of North-West Europe and the UK has supported carbon prices, with increased EUA demand required to cover gas-fired power generation. High carbon prices in the UK has also triggered the Cost Containment Mechanism in December, a mechanism designed to safeguard against high price volatility.
Wholesale price snapshot 

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