Energy Wholesale Market Review – 03 June 2024

Headlines

Last week saw mixed movements across tracked power and gas contracts, with day-ahead gas rising 0.3% to 82.50p/th, following maintenance at gas fields and terminals across the Norwegian and UK continental shelves, in tandem with reduced temperatures across GB. Similarly, June 24 gas was up 0.7% at 82.60p/th, and July 24 gas increased 0.9% to 82.90p/th. Opposing its gas counterpart, day-ahead power fell 5.7% to £74.44/MWh, influenced by higher levels of wind generation reducing gas for power demand. Most seasonal gas contracts declined last week, down by 0.6% on average, with both winter 24 and summer 25 gas dropping 0.3% and 1.1% respectively, subsiding to 101.35p/th and 91.25p/th. Longer term contracts remain influenced by strong gas storage stocks across Europe, currently sitting at 70% fullness. Conversely, most seasonal power contracts boosted last week, up on average by 0.2%, as winter 24 power expanded 0.4% to £92.25/MWh, and winter 25 rose 0.6% to £90.25/MWh. Brent crude oil found bullish sentiment rising 0.6% to $83.15/bl, influenced by ongoing conflict in the Middle East and uncertainty ahead of the OPEC+ meeting on 2 June.

Baseload electricity

Forward curve comparison

  • Day-ahead power fell 5.7% to £74.44/MWh, following higher levels of wind generation on the system compared to the previous week
  • June 24 power remained static at £74.25/MWh while July 24 power decreased 1.0% to £76.50/MWh

Annual October contract

  • Q324 power moved 0.3% lower to £78.00/MWh
  • The annual October 24 contract rose 0.1% to £86.75/MWh, 17.2% lower than the same time last year (£104.75/MWh)

Peak electricity

Forward curve comparison

  • Day-ahead peak power was down 4.7% to £75.25/MWh, following its baseload counterpart lower
  • June 24 peak power declined 0.6% at £78.75/MWh, and July 24 peak power decreased 0.3% to £81.50/MWh

Annual October contract

  • The annual October 24 peak power rose 0.2% to £98.50/MWh
  • This is 36.0% lower than the same time last year (154.00/MWh)

Seasonal power prices

Seasonal baseload power contracts

  • Most seasonal power contracts boosted last week, up on average by 0.2%
  • winter 24 power expanded 0.4% to £92.25/MWh, while summer 25 fell 0.3% to £81.25/MWh

Seasonal peak power curve

  • Seasonal peak power contracts saw mixed movements last week, up 0.3% on average
  • winter 24 gas increased 0.9% to £106.75/MWh, while summer 25 peak power dropped 0.3% to £86.00/MWh

Commodity price movements

Oil and coal

  • Brent crude oil found bullish sentiment rising 0.6% to $83.15/bl due to a variety of market fundamentals, some of which have remained a prominent driver of prices across multiple reporting weeks
  • On-going conflict in the middle-east continues to cast doubt over future supply from the region
  • Looming news of OPEC+ production cuts also continue to stimulate upward price adjustments in Brent crude oil, with the proposed cuts said to equate around 6% of global demand
  • On 2 June, members of OPEC+ agreed to extend supply cuts of 3.66m barrels a day until the end of 2025 – the group also agreed to extend the additional voluntary supply cuts of 2.2m barrels a day until the end of September 2024
  • This exerts a slightly bearish influence on prices at the moment, as the additional supply cuts extended until September may not be substantial enough to offset a potential increase in crude oil inventories

Carbon (UK and EU ETS)

  • Following the movements seen across gas prices, UK ETS carbon registered gains across the reporting period, finding further support from recent colder weather
  • UK ETS gained 5.1% on average to £46.28/t, as colder weather supported rising gas heating demand. As a result, UK ETS carbon prices reached the highest level seen since October 2023 at £48.54/t on 31 May
  • Opposing this, the EU ETS scheme traded 1.6% lower on average to €74.51/t, influenced by public holidays across Europe impacting trading volumes, and lower demand
  • The European Commission will cut 267 million allowances from carbon market auctions across the September 2024 – August 2025 period, with the removed allowances transferred to the market stability reserve (MSR)
  • Strong and stable levels of wind generation over the coming seven-day period should reduce reliance on gas and other fossil-fuel fired emitters to meet demand, therefore lowering demand on EUA allowances. However, potential downturn in UK ETS prices could be offset by the expected lowering of temperatures in the UK this week

Wholesale price snapshot – Friday-on Friday

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