Energy Wholesale Market Review – 12 April 2024

Headlines

It was a predominantly bullish week across most tracked gas and power contracts this week, with day-ahead power the exception to this trend, registering a notable decrease. Day-ahead gas rose 15.5% to 72.50p/th, following higher gas demand ahead of expected colder temperatures throughout next week. Day-ahead power, however, fell 54.5% to £26.50/MWh, following the anticipated increase to wind outturn early next week – falling to the lowest prices seen since July 2020. However, May 24 gas was up 15.6% at 74.90p/th, and June 24 gas increased 15.0% to 74.30p/th. All seasonal gas contracts boosted this week, up by 10.2% on average, with both winter 24 and summer 25 gas increasing 13.7% and 14.9% respectively, lifting to 92.10p/th and 86.40p/th. Similarly, all seasonal power contracts saw gains this week, up on average by11.4%, as winter 24 and summer 25 expanded 10.9% and 12.7% respectively, rising to £82.60/MWh and £74.40/MWh. Brent crude experienced a bullish week following continued tensions across the Middle East, with the potential for conflict to spread to further regions and impact oil supply levels.

Baseload electricity

Forward curve comparison

  • Day-ahead power fell 54.5% to £26.5/MWh, weighed on by strong wind generation projections for Monday, reaching record price lows not seen since July 2020.
  • Opposing this, May 24 power climbed 14.9% at £63.75/MWh and June 24 power increased 13.3% to £66.00/MWh.

Annual October contract

  • Q324 power moved 12.8% higher to £68.50/MWh.
  • The annual October 24 contract rose 11.7% to £78.55/MWh, however this is 39.8% lower than the same time last year (£130.50/MWh).

Peak electricity

Forward curve comparison

  • Day-ahead peak power was up 15.6% to £62.70/MWh, opposing the movement registered across its baseload counterpart.
  • May 24 peak power gained 12.1% at £66.10/MWh, and June 24 peak power increased 11.8% to £68.30/MWh.

Annual October contract

  • The annual October 24 peak power rose 4.5% to £85.63/MWh.
  • However, this is 55.2% lower than the same time last year (191.25/MWh).

Seasonal power prices

Seasonal baseload power contracts

  • All seasonal power contracts boosted this week, up on average by 11.4%.
  • Winter 24 and summer 25 expanded 10.9% and 12.7% respectively, rising to £82.60/MWh and £74.50/MWh.

Seasonal peak power curve

  • All seasonal peak power contracts boosted this week, up 4.1% on average.
  • Winter 24 and summer 25 peak power increased 3.1% and 5.1% respectively, rising to £89.80/MWh and £74.35/MWh.

Commodity price movements

Oil and coal

  • Brent crude experienced another bullish week, although remaining relatively stable when compared to recent increases, rising 0.8% to average $90.29/bl, as the market assesses security sentiment with rising tensions between Iran and Israel.
  • As geopolitical tensions the Middle East continue to grow, this may impact oil output levels from the region, and this, in tandem with concerns over tightening supply following OPEC+ supply cuts and reduced Russian export capacity, provides a bullish sentiment for the market to follow.
  • However, recent information surrounding global inflation concerns acts to dampen oil demand, and limit the extent of the aforementioned bullish factors.
  • Although global oil demand is set to rise in 2024, it is expected to remain below projected levels, states the IEA.
  • This follows weak deliveries to countries in the Organisation for Economic Co-operation and Development (OECD), and the near-completion of the post-Covid rebound, outlined in the IEA oil market report for April

Carbon (UK and EU ETS)

  • This week represented a bullish period for both UK and EU carbon prices, with an 11.9% increase to EU ETS prices , averaging €65.68/t, primarily driven by increases across gas prices following news of the destruction to the Trypillya power plant in Ukraine, one of the biggest providers of electricity in the country.
  • This resulted in EU ETS prices reaching over €70.00/t for the first time since January this year on the 12 April, at €70.42/t – just over a €5.00 increase from the value seen on 11 April.
  • UK ETS prices experienced a gain of 3.2% to average £35.84/t due to reduced wind generation on the system acting to bolster the requirements for gas-fired generation to meet demand – however, stronger gains were limited by above-average temperatures.
  • UK ETS prices are expected to remain bullish in the short-term, finding support from forecasts of reduced wind generation in the week ahead, and below-average temperatures forecasts.

Wholesale price snapshot – Friday-on Friday

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