7 October 2022

Headlines

This week saw predominately bearish price movements for wholesale gas and power contracts in GB, but with some exceptions. We continue to observe volatility particularly in nearer-term contracts, but with some levels of volatility also feeding into longer dated contracts. In GB, a strong influx of LNG imports continues to soften the near-term supply/demand balance, with continued price reductions on the near-term throughout much of September into early October. Day-ahead gas fell 3.2% to 167.00p/th this week, following consistent levels of UKCS domestic gas production in tandem with steady levels of flows received from Norway. Following gas, day-ahead baseload power saw losses week-on-week, down 28.9% to average £160.00/MWh, following an uptick in forecast wind output towards the week’s end. The majority of seasonal gas contracts declined on average this week, falling 6.0% on average, with summer 23 gas slipping 13.4% to 376.50p/th and winter 23 declining 12.5% to 398.25p/th. Like gas, seasonal power contracts shared collectively downward price movements, a 7.8% reduction on average. Winter 23 saw the largest losses week-on-week, falling 11.5%.

Baseload electricity

Forward curve comparison

  • Day-ahead power fell 28.9% to £160.00/MWh, amid forecasts of increased wind output into the weekend
  • November 22 power slipped 16.7% to £500.00/MWh and December 22 power decreased 8.2% to £640.00/MWh.

Annual October contract

  • Q123 power moved 4.9% higher to £670.00/MWh.
  • However, the annual April 23 contract lost 9.5% to £335.00/MWh, but remained 295.0% higher than the same time last year (£84.8/MWh).

Peak electricity

Forward curve comparison

  • Day-ahead peak power was down 9.7% to £235.00/MWh, following baseload power lower.
  • November 22 peak power declined 12.3% to £785.00/MWh, and December 22 peak power lost 4.6% to £900.00/MWh.

Annual October contract

  • The annual April 23 peak power contract fell 9.1% to £405.75/MWh
  • This is a 3.7% reduction against the Annual April 23 contract the same time a month ago (£421.50/MWh)

Seasonal power prices

Seasonal baseload power contracts

  • All tracked seasonal power contracts fell this week, down on average by 7.8%.
  • Summer 23 and winter 23 reduced 7.1% and 11.5% respectively, decling to £325.00/MWh and £345.00/MWh.

Seasonal baseload power curve

  • Like baseload, tracked seasonal peak power contracts slipped this week, down 8.8% on average.
  • Summer 23 and winter 23 peak power decreased 6.6% and 11.0% respectively, declining to £366.50/MWh and £445.00/MWh.

Commodity price movements

Oil and coal

  • Brent crude prices rose 4.5% this week to average $91.30/bl.
  • Prices for much of the week gained support from uncertainty around the outcome of OPEC+ discussions on output cuts, proposed as a mechanism to offset a potential demand growth decline
  • Later in the week, OPEC+ confirmed production cuts of 2mn bpd, the largest production cut since the start of the Coronavirus pandemic, and prices found support from Goldman Sachs raising its oil price forecast for this year and 2023 in response

Carbon (UK and EU ETS)

  • EU and UK ETS prices saw mixed movements this week. EU ETS lifted 1.8% to average €67.77/t, whilst UK ETS carbon retracted 2.5% to £73.88/t.
  • EUAs saw price rises this week following strong auctions, reaching above €70/t for the first time in over a week.

Wholesale price snapshot – Friday-on Friday

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