Energy Wholesale Market Review – 08 July 2024

Headlines

Wholesale gas and power prices saw downward price movements predominantly throughout the week in GB, with European strong gas storage levels and increased Norwegian and UK Continental Shelf flows acting to soften supply margins, resulting in most power and gas contracts falling. Day-ahead gas fell 2.0% to 78.05p/th, as lower levels of Norwegian and UK Continental Shelve gas field outages acted to increase gas supply to GB. However, day-ahead power rose 2.5% to £80.74/MWh, opposing its gas counterpart, despite higher wind generation outturn week-on-week.  August 24 gas was down 5.1% at 77.15p/th, and September 24 gas decreased 4.5% to 81.95p/th. Most seasonal gas contracts declined last week, down by 0.3% on average, with both winter 24 and summer 25 gas dropping 2.5% and 0.8% respectively, subsiding to 97.90p/th and 91.00p/th. Most seasonal power contracts declined this week too, down on average by 1.0%, as winter 24 power decreased 2.0% to £87.50/MWh, while summer 25 fell 1.7% to £77.00/MWh.

Baseload electricity

Forward curve comparison

  • Day-ahead power rose 2.5% to £80.74/MWh, despite higher levels of wind generation on the system, which typically acts as a price depressor due to lower gas-for-power requirements.
  • August 24 power slipped 4.2% at £69.25/MWh and September 24 power decreased 3.0% to £75.50/MWh.

Annual October contract

  • Q424 power remained level at £85.00/MWh.
  • The annual October 24 contract lost 1.8% to £82.25/MWh, 29.4% lower than the same time last year (£116.50/MWh).

Peak electricity

Forward curve comparison

  • Day-ahead peak power was up 7.3% to £80.75/MWh, following its baseload counterpart higher.
  • However, August 24 peak power declined 3.4% to £76.00/MWh, and September 24 peak power decreased 3.8% to £80.50/MWh.

Annual October contract

  • The annual October 24 peak power rose 1.5% to £94.92/MWh.
  • This is 40.8% lower than the same time last year (160.25/MWh).

Seasonal power prices

Seasonal baseload power contracts

  • Most seasonal power contracts declined last week, down on average by 1.0%.
  • Winter 24 power decreased 2.0% to £87.50/MWh, while summer 25 fell 1.7% to £77.00/MWh.

Seasonal peak power curve

  • All seasonal peak power contracts declined, down 1.6% on average.
  • Winter 24 and summer 25 peak power dropped 1.7% and 2.7% respectively, falling to £101.50/MWh and £82.00/MWh.

Commodity price movements

Oil and coal

  • Brent crude oil saw bullish movements across the reporting period, rising 1.5% to average €86.91/bl, driven by data from the EIA which outlined that US crude inventories had fallen by 12.2 million in the week previous. Similarly, wider movements remain underpinned by a potential rate cuts by the US central bank, and increasing tensions across the Middle East
  • Moreover, increased Chinese demand due to the country looking to bolster its strategic reserves, led to a tighter market amid sustained OPEC+ supply cuts.
  • Prices also found support as the market reacted to the arrival of Hurricane Beryl, and the impact this may have on the Gulf of Mexico and the infrastructure in place.
  • However, some bearish influence after news of weaker economic data from the US acted to impact demand from the country.

Carbon (UK and EU ETS)

  • UK ETS carbon prices were driven lower by increased wind generation on the system, falling 0.7% to average £46.23/t. Stronger losses were limited however, due to sustained below-average temperatures acting to increase gas-for-heating requirements.
  • EU ETS carbon prices saw a week-on-week increase, rising 5.0% to average €70.63/t, finding support from increased industrial demand, paired with EU elections, most notably France and the UK.
  • UK ETS carbon prices are likely to become more interlinked with renewable generation as more renewable assets come online across the remainder of the year.
  • In more recent timescales, UK ETS carbon is expected to increase across the week ahead due to projections of lower wind generation.

Wholesale price snapshot – Friday-on Friday

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