Energy Wholesale Market Review – 11 August 2023


This week favoured a bullish outcome for gas and power prices, both in the near-term and further along the forward curve – underpinned by the uncertainty surrounding future gas imports into European energy markets from potential strike action at Australian LNG terminals. Day-ahead gas rose 21.7% to 85.50p/th, following uncertain Australian LNG supplies – the effect of this being heightened by Europe’s increased reliance on the global LNG market. Day-ahead power rose 14.5% to £87/MWh, following the bullish momentum gained from its equivalent gas contract, and a reduction in day-ahead wind forecasts. September 23 gas was up 28.4% at 94.00p/th, and October 23 gas increased 22.0% to 102.50p/th.  All seasonal gas contracts boosted this week, up by 7.4% on average, as both winter 23 and summer 24 gas increased 12.2% and 7.9% respectively, lifting to 129.00p/th and 130.00p/th. Larger gains across seasonal gas contracts have been limited by above-average EU gas storage levels, acting to mitigate stronger increases. All seasonal power contracts traded higher this week, up on average by 4.5%, as winter 23 and summer 24 expanded 7.8% and 6.2% respectively, rising to £120.75/MWh and £112.00/MWh.

Baseload electricity

Forward curve comparison

  • Day-ahead power rose 14.5% to £87.00/MWh, following notable gains across its gas counterpart, the result of supply fears following potential strike action at Australian LNG terminals. This was compounded by weaker wind generation forecasts, tightening system margins
  • September 23 power climbed 16.3% to £89.00/MWh and October 23 power increased 14.4% to £95.50/MWh.

Annual October contract

  • Q423 power moved 7.5% higher to £114.00/MWh.
  • The annual October 23 contract rose 7.0% to £116.38/MWh, 64.8% lower than the same time last year (£330.5/MWh).

Peak electricity

Forward curve comparison

  • Day-ahead peak power was up 14.6% to £88.25/MWh, following its baseload counterpart higher
  • September 23 peak power gained 10.0% at £96.79/MWh, and October 23 peak power increased 11.5% to £110.41/MWh

Annual October contract

  • The annual October 23 peak power rose 2.7% to £129.4/MWh
  • However, this is 73.3% lower than the same time last year (485.25/MWh)

Seasonal power prices

Seasonal baseload power contracts

  • All seasonal power contracts registered gains this week, up on average by 4.5%.
  • Winter 23 and summer 24 expanded 7.8% and 6.2% respectively, rising to £120.75/MWh and £112.00/MWh.

Seasonal peak power curve

  • Most seasonal peak power contracts boosted this week, up 2.6% on average, with winter 24 the exception
  • Winter 23 and summer 24 peak power increased 3.6% and 1.6% respectively, rising to £141.40/MWh and £117.40/MWh.

Commodity price movements

Oil and coal

  • Crude reached a seven-month high of $87.28/bl on 10 August with multiple bullish factors impacting the commodity
  • Brent crude continued to register a week-on-week gain of 1.3% to $85.96/bl, following extensions to output cuts by Saudi Arabia and Russia – paired with concerns over threats to Russian oil shipments following tensions with Ukraine
  • However, stronger gains were limited by a reported rise in U.S. crude inventories and slow demand outlooks from China and India
  • Lower-than-expected Chinese demand has prompted fears of reduced future global demand
  • As Chinese economic growth is set to resurge in the future, prices may rise. However, this remains uncertain loosening potential constraints on global supply
  • The IEA Oil Market Report for August outlined that world oil demand is scaling record highs, with global demand set to rise 2.2 million barrels a day in 2023

Carbon (UK and EU ETS)

  • UK ETS prices fell to a record low of £39.90/t on Friday, as industrial demand continues to trend below average, paired with a decrease in carbon-intensive power generation.
  • This led to a 5.3% decrease to average £40.51/t. The recent low prices raise concerns that the UK may be seen as failing to further green investment, and disincentivise carbon-intensive practices
  • Similarly, EU ETS carbon registered week-on-week price losses, with prices dropping to €84.51/t, down 1.3%, despite growth across gas contracts following supply concerns, and reduced August auction supply.
  • Power demand is set to rise across the coming months, as temperatures fall and increased pressure for heating is applied. As a result, more expensive forms of power generation may be required, leading to increased ETS prices

Wholesale price snapshot – Friday-on Friday

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