This week represented a mixed picture for wholesale gas and power contracts, especially when acknowledging the difference between shorter and longer termed contracts. On shorter-dated contracts, a mostly bearish sentiment was observed – whereas prices further out on the forward curve recorded gains, a potential response to fears surrounding future LNG supply as China returns to pre-COVID growth trajectories suggest some market commentators. Day-ahead gas fell 3.1% to 78.50p/th following strong supply levels. Conversely, day-ahead power registered gains week-on-week – rising 1.2% to £86.00MWh, as periods of low wind generation acted to tighten system margins. June 23 gas fell 2.2% to 79.20p/th, and July 23 gas dropped 2.5% to 79.00p/th. Most seasonal gas contracts, winter 23 being the exception, registered gains – seeing a 1.4% increase overall. Similarly, all seasonal baseload power contracts, excluding S25, rose week-on-week seeing a growth level of 1.5% overall.
Forward curve comparison
- Day-ahead power rose 1.2% to £86.00/MWh, following decreased wind generation levels.
- June 23 power climbed 0.8% to £88.00/MWh and July 23 power decreased 0.5% to £92.00/MWh.
Annual October contract
- Q323 power moved 0.8% lower to £96.50/MWh.
- The annual October 23 contract rose 2.1% to £135.75/MWh, 15.2% lower than the same time last year (£160/MWh).
Forward curve comparison
- Day-ahead peak power was down 0.2% to £91.25/MWh, following its baseload counterpart.
- June 23 peak power declined 7.5% to £93.75/MWh, whereas July 23 peak power rose 3.1% to £100.75/MWh.
Annual April contract
- The annual October 23 peak power rose 3.2% to £166.38/MWh
- This is 18.7% lower than the same time last year (£204.68/MWh).
Seasonal power prices
Seasonal baseload power contracts
- Most seasonal power contracts boosted this week, up on average by 1.5%.
- Winter 23 and summer 24 expanded 1.3% and 3.0% respectively, rising to £150.50/MWh and £121.00/MWh.
Seasonal baseload power curve
- All Seasonal peak power contracts rose this week, up 3.0% on average.
- Winter 23 and summer 24 peak power increased 3.9% and 2.2% respectively, rising to £195.50/MWh and £137.25/MWh.
Commodity price movements
Oil and coal
- Brent crude oil saw a marginal price gain of 0.2% despite persistent recession fears, coupled with a rise in US oil inventories. Lower crude imports further compound fears surrounding global oil demand. The potential bullish price impact could be a result of increased Chinese demand as travel rates pick up.
- Fears surrounding a US recession have increased as discussions over the US government raising the debt ceiling spurs worries that the banking sector may be in crisis.
- Speculation about OPEC+ potentially announcing further output cuts as prices continue to be weighed upon remain, as wider market supply outpaces demand.
Carbon (UK and EU ETS)
- Across the ETS schemes this week, UK ETS carbon saw a marginal drop of 0.8% to average £60.06. The UK ETS remained valued below the EU counterpart following policy uncertainty, and wider supply and demand fundamentals. However, the EU ETS scheme saw a gain of 1.5% to average €88.30, following decreased temperatures, and a drop in wind generation across North-west Europe.
- Prices may find support from decreased temperatures leading to increased gas-for-power demand.
- On 15 May, the European Commission will publish the total number of allowances in circulation on the EU carbon market in 2022 – which determines the functioning of the Market Stability Reserve of the scheme.