Energy Wholesale Market Review – 10 November 2023

Headlines

It was a largely bearish week for gas and power contracts this week, continuing the trend of decreasing wholesale prices observed across much of 2023 – however the day-ahead contracts were the exception to this bearish trend. Day-ahead gas rose 2.0% to 100.00p/th, following periods of below-average temperature during the week, acting to increase demand. Likewise, day-ahead power grew 3.3% to £93.00/MWh, taking direction from increases across the near-term gas markets, despite increased wind output during the week. Opposing this however, December 23 gas was down 6.2% at 116.80p/th, and January 24 gas decreased 5.2% to 125.20p/th. All seasonal gas contracts fell this week too, down by 2.4% on average. Summer 24 and winter 24 gas dropped 4.5% and 3.5% respectively, subsiding to 118.00p/th and 132.70p/th.  All seasonal power contracts traded lower this week, down on average by 0.9%. Summer 24 and winter 24 power subsided 1.0% and 0.4% respectively, falling to £100.00/MWh and £118.50/MWh.

Baseload electricity

Forward curve comparison

  • Day-ahead power rose 3.3% to £93/MWh, finding support from its gas counterpart, despite rising wind generation forecasts for Monday
  • December 23 power slipped 3.7% at £98.5/MWh and January 24 power decreased 3.9% to £116.5/MWh.

Annual October contract

  • Q124 power moved 1.9% lower to £114.75/MWh.
  • The annual April 24 contract lost 0.7% to £109.25/MWh, 47.3% lower than the same time last year (£207.50/MWh).

Peak electricity

Forward curve comparison

  • Day-ahead peak power was up 25.1% to £122.55/MWh, following its baseload counterpart higher
  • December 23 peak power gained 1.1% at £122.34/MWh, and January 24 peak power decreased 4.2% to £144.96/MWh.

Annual October contract

  • The annual April 24 peak power rose 1.6% to £123.45/MWh
  • This is 48.2% lower than the same time last year (238.3/MWh).

Seasonal power prices

Seasonal baseload power contracts

  • All seasonal power contracts declined this week, down on average by 0.9%.
  • Summer 24 power decreased 1.0% to £100.00/MWh, while winter 24 fell 0.4% to £118.50/MWh.

Seasonal peak power curve

  • All Seasonal peak power contracts boosted this week, up 1.6% on average.
  • Summer 24 and winter 24 peak power increased 1.9% and 1.4% respectively, falling to £108.50/MWh and £138.40/MWh.

Commodity price movements

Oil and coal

  • Prices dropped amid a rise in U.S crude inventories, indicating weakening demand from the major consumer – with Brent crude registering a week-on-week loss of 5.8% to average $82.32/bl and experiencing the lowest price since July 2023 on 09 November at $80.01/bl
  • Easing export demand in China, providing further bearish sentiment
  • Likewise, Chinese economic data has been trending lower-than-anticipated, acting to offset price gains influenced by supply cuts from Saudi Arabia and Russia
  • Stronger bearish movements were offset to some extent, as market attention turns to an upcoming OPEC+ meeting
  • Through the remainder of 2023, uncertainty surrounding the Israel-Hamas conflict continues to influence prices, in tandem with continued OPEC+ supply cuts adding further value to the commodity

Carbon (UK and EU ETS)

  • This week represented a mixed period for both ETS schemes, with the EU ETS carbon price dropping 3.4% to €76.25/t, whereas the UK ETS carbon rose 9.1% to £41.18/t
  • Price support arose from colder seasonal temperatures acting to increase demand for fuelled forms of power generation
  • However, stronger gains were limited by increased wind generation across the UK
  • Likewise, EU ETS carbon prices reached the lowest price seen in a year on 09 November at €75.74/t due to renewed selling and a further build in speculative short positions
  • Power demand is set to rise across the coming months, as temperatures fall and increased pressure for heating is applied. As a result, there will likely be a higher utilisation of fossil fuelled assets – inflating prices across both ETS schemes

Wholesale price snapshot – Friday-on Friday

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