Energy Wholesale Market Review – 14 July 2023

Headlines

Wholesale gas and power prices saw downward price movements throughout the week in GB, with European strong gas storage levels and increased Norwegian and UK Continental Shelf flows acting to soften margins, resulting in all power and gas contracts falling. Day-ahead gas fell 15.2% to 67.00p/th, following the expectation that the remaining Norwegian gas field outages may be coming to an end. Similarly, day-ahead power fell 5.9% to £80.00/MWh, following its gas counterpart, however losses were mitigated by forecasts of low wind outturn next week. August 23 gas was down 15.2% at 68.25p/th, and September 23 gas decreased 15.3% to 73.25p/th. All seasonal gas contracts declined last week, down by 5.9% on average, with both winter 23 and summer 24 gas dropping 9.4% and 7.3% respectively, subsiding to 120.00p/th and 121.00p/th. All seasonal power contracts declined this week too, down on average by 5.4%, as winter 23 power decreased 7.0% to £119.00/MWh, while summer 24 fell 5.2% to £110.00/MWh.

Baseload electricity

Forward curve comparison

  • Day-ahead power fell 5.9% to £80.00/MWh, following its gas counterpart, however losses were mitigated by Monday’s forecasts of low wind outturn.
  • August 23 power slipped 9.4% at £77.00MWh and September 23 power decreased 7.7% to £84.00/MWh.

Annual October contract

  • Q423 power moved 7.1% lower to £111.50/MWh.
  • The annual October 23 contract lost 9.4% to £110.5/MWh, 49.3% lower than the same time last year (£218/MWh).

Peak electricity

Forward curve comparison

  • Day-ahead peak power was down 15.8% to £74.00/MWh, following its baseload counterpart.
  • August 23 peak power declined 11.0% at £78.98/MWh, and September 23 peak power decreased 8.6% to £94.55/MWh.

Annual April contract

  • The annual October 23 peak power fell 9.9% to £127/MWh.
  • This is 61.2% lower than the same time last year (327.25/MWh).

Seasonal power prices

Seasonal baseload power contracts

  • All seasonal power contracts declined this week, down on average by 5.4%.
  • Winter 23 power decreased 7.0% to £119.00/MWh, while summer 24 fell 5.2% to £110.00/MWh.

Seasonal baseload power curve

  • All Seasonal peak power contracts declined this week, down 9.4% on average.
  • Winter 23 and summer 24 peak power dropped 12.6% and 6.2% respectively, falling to £140.50/MWh and £113.50/MWh.

Commodity price movements

Oil and coal

  • Continuing the trend observed from the prior week, Brent crude experienced an upward movement this week, rising 4.3% to $79.47/bl.
  • Crude reached its highest price of $81.35/bl since April on 14 July, boosted by supply disruptions from Libya and Nigeria.
  • Bullish price movements were influenced mainly by recent supply cuts from OPEC+ nations tightening the market, along with declines in the value of the dollar.
  • Continuing recent trends, gains were subdued by general concern and uncertainty over future global economic outlook.

Carbon (UK and EU ETS)

  • Last week, both carbon schemes saw losses on average, when compared to the previous week.
  • Despite the losses seen, both ETS schemes remained level over the reporting period, amid mostly stable temperatures and wind generation across much of Europe.
  • The changes in average prices is largely attributed to the spike in UK ETS seen in the beginning half of the prior week.
  • The expectation of an onset of a severe heatwave in Europe will see prices across both emission schemes rise, as it will incite a heightened demand for cooling appliances.

Wholesale price snapshot – Friday-on Friday

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