Energy Wholesale Market Review – 13 May 2024

Headlines

Day-ahead gas rose 0.4% to 74.57p/th last week, following reduced Norwegian gas flows due to maintenance across various gas fields, however, stronger gains were limited by above-average temperatures acting to reduce gas demand. Opposing the movements seen across its gas counterpart, day-ahead power fell 16.2% to £61.16/MWh, finding bearish influence from stronger projections of wind generation for 13 May, acting to reduce the reliance on more expensive forms of power generation. Similarly, the remaining tracked gas contracts registered losses, with June 24 gas down 1.4% at 72.60p/th, and July 24 gas falling 1.5% to 72.35p/th. Moreover, all seasonal gas contracts declined last week, down by 1.2% on average. Conversely, most seasonal power contracts boosted last week, up on average by 0.7%. Brent crude oil continued with the recent downward movements experienced last week. Subsequently, prices were 2.5% lower at $83.37/bl, driven down by weaker-than-expected Chinese demand. The EU ETS registered gains this week, up 3.6% to €72.00/t, and the UK ETS grew too, up 3.7% to £37.95/t, supported by reduced wind generation across the past week.

Baseload electricity

Forward curve comparison

  • Day-ahead power fell 16.2% to £61.16/MWh, with losses supported by a bearish influence from increased wind outturn projections in the week ahead, and above-average temperatures reducing power-for-heating demand across the week
  • Conversely, June 24 power climbed 1.5% at £66.25/MWh and July 24 power increased 2.6% to £68.50/MWh.

Annual October contract

  • Q324 power moved 0.7% higher to £68.75/MWh
  • The annual October 24 contract rose 1.0% to £79.00/MWh, however this is 37.1% lower than the same time last year (£125.50/MWh

Peak electricity

Forward curve comparison

  • Day-ahead peak power was down 4.9% to £72.50/MWh, following its baseload counterpart lower
  • Opposing this, June 24 peak power gained 1.4% to £72.25/MWh, and July 24 peak power increased 2.4% to £74.50/MWh

Annual October contract

  • The annual October 24 peak power rose 1.1% to £90.83/MWh
  • However, this remains 50.2% lower than the same time last year (182.25/MWh)

Seasonal power prices

Seasonal baseload power contracts

  • Most seasonal power contracts saw minor gains last week, up on average by 0.7%
  • Winter 24 power expanded 1.8% to £82.75/MWh, whereas summer 25 remained static at £75.25/MWh

Seasonal peak power curve

  • All Seasonal peak power contracts boosted last week, up 1.6% on average
  • Winter 24 and summer 25 peak power increased 1.3% and 1.9% respectively, rising to £95.00/MWh and £81.75/MWh

Commodity price movements

Oil and coal

  • We saw the continuation of bearish movements across Brent crude last week, dropping 2.5% to $83.37/bl, in line with the overall downward movement seen across the end of April and May to date
  • The decrease can be attributed to Chinese demand continuing to trend below anticipated levels, in tandem with a stronger US dollar, and as US inflation concerns acting to outweigh increased tensions across the Middle East across the week
  • Despite the overall drop in prices week-on-week, the price of brent crude rose across the week, starting the reporting period at $82.52/t and ending at $83.94/bl after experiencing daily gains
  • The bullish influence came from falling U.S. crude oil inventories, driven by higher refinery production, coupled with growing demand projections across the United States

Carbon (UK and EU ETS)

  • Both ETS schemes registered week-on-week gains across the reporting period with the bullish sentiment driven by reduced Norwegian gas supply levels, and lower wind generation acting to increase the reliance on more expensive forms of power generation
  • As a result, UK ETS carbon prices rose 3.7% to average £37.95/t, and EU ETS carbon grew 3.6% to €72.00/t
  • However, stronger gains were limited by above-average temperatures acting to limit gas demand
  • Moreover, higher wind generation across the UK in the week commencing 13 May will place less reliance on more expensive forms of power generation, further limiting prices
  • UK ETS carbon prices remain valued below its EU counterpart following policy uncertainty, and supply and demand factors

Wholesale price snapshot – Friday-on Friday

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