Energy Wholesale Market Review – 01 July 2024

Headlines

Last week largely represented a mixed period for wholesale gas and power contracts, with day-ahead power contracts decreasing in the week, opposing the movements seen in all longer-term contracts. Subsequently, day-ahead gas fell 0.5% to average 79.65p/th, weighed by elevated temperatures throughout the week acting to limit gas-for-heating demand. Similarly, day-ahead power dropped 3.4% to £78.75/MWh, following the downward movements from its equivalent gas contract, coupled with lower week-on-week wind generation. Across the longer contracts, July 24 gas was up 0.8% at 79.65p/th, and August 24 gas also decreased 0.8% to 81.33p/th. All seasonal power contracts grew last week, up on average by 1.4%, as winter 24 power increased 1.7% to £89.25/MWh, while summer 25 rose 1.6% to £78.30/MWh. Likewise, all seasonal gas contracts rose last week, up by 1.0% on average, with summer 25 and winter 25 gas rising 0.5% and 0.3% to 91.70p/th and 99.60p/th, respectively. In the commodity markets, brent crude rose 0.6% following growing gasoline demand and falling stockpiles in the U.S., and EU and UK ETS fell by 2.5% and 2.9% respectively.

Baseload electricity

Forward curve comparison

  • Day-ahead power fell 3.4% to £78.75/MWh, following stronger levels of wind generation on the system acting to loosen system margins and ease gas-for-power demand.
  • However, July 24 power increased 1.4% to £73.25/MWh and August 24 power gained 0.3% to £72.25/MWh.

Annual October contract

  • Q324 power moved 2.6% higher to £75.40/MWh.
  • The annual October 24 contract grew 0.7% to £83.78/MWh, 27.1% lower than the same time last year (£115.00/MWh).

Peak electricity

Forward curve comparison

  • Day-ahead peak power was down 2.1% to £75.25/MWh, following its baseload counterpart lower.
  • July 24 peak power rose 5.6% to £79.20/MWh, and August 24 peak power increased 1.2% to £78.70/MWh.

Annual October contract

  • The annual October 24 peak power grew 1.2% to £96.37/MWh.
  • This is 38.7% lower than the same time last year (157.25/MWh).

Seasonal power prices

Seasonal baseload power contracts

  • All seasonal power contracts rose last week, up on average by 1.4%.
  • Winter 24 power increased 1.7% to £89.25/MWh, while summer 25 grew 1.6% to £78.30/MWh.

Seasonal peak power curve

  • All Seasonal peak power contracts increased last week, up 1.2% on average.
  • Winter 24 and summer 25 peak power climbed 1.0% and 0.8% respectively, reaching £103.30/MWh and £84.30/MWh.

Commodity price movements

Oil and coal

  • Brent Crude continued to experienced gains across the week, rising 0.6% to average $86.45/bl, amid growing gasoline demand and falling stockpiles in the U.S., acting to provide bullish influence, as the summer demand season enters its peak.
  • Moreover, further bullish support came from potential supply disruption across the Middle East, due to rising concern that the Israel-Hamas conflict will spread to impact output levels from Lebanon and Iran.
  • However, bearish influence came after news of the dollar index, which measures performance against six other major currencies, had risen after recent data showed U.S. business activity reached a two year high in June.

Carbon (UK and EU ETS)

  • The continuation of above-average temperatures across most of the week led to the easing of gas prices, in turn easing UK ETS carbon prices. Moreover, UK ETS carbon prices found bearish influence from periods of increased wind generation on the system, acting to reduce the requirement for more carbon-intensive forms of power.
  • Likewise, losses were seen across EU ETS carbon following continued above-average temperatures across Europe during last week, which acted to decrease overall power demand.
  • However, gains were limited by a drop in coal prices across the week. This typically makes it more economical to generate power using coal-fired generation, a more expensive fuel source, in turn raising carbon prices.

Wholesale price snapshot – Friday-on Friday

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