Energy Wholesale Market Review – 17 June 2024

Headlines

All power and gas contract prices rose last week, amid bullish fundamentals of easing wind outturn coupled with reduced gas flows. Day-ahead gas increased 7.7% to 84.05p/th, following rising heating demand due to below average seasonal temperatures, paired with lower gas flows into GB amid ongoing outage maintenance at gas terminals on the Norwegian Continental Shelf. Day-ahead power grew 9.6% to £83.28/MWh, following its gas counterpart, whilst driven by a drop in wind outturn throughout the week and subsequent rise in gas-for-power demand. July 24 gas was up 5.7% at 83.23p/th, and August 24 gas increased 5.7% to 84.75p/th. All seasonal gas contracts registered gains last week, up by 3.2% on average, while both winter 24 and summer 25 gas increased 4.7% and 3.9% respectively, lifting to 101.10p/th and 90.00p/th. All seasonal power contracts boosted last week, up on average by 1.4%, as winter 24 and summer 25 expanded 1.4% and 1.3% respectively, rising to £88.50/MWh and £77.50/MWh.

Baseload electricity

Forward curve comparison

  • Day-ahead power rose 9.6% to £83.28/MWh, following varied levels of wind generation across the week.
  • July 24 power climbed 11.4% at £80.5/MWh and August 24 power increased 12.3% to £79.75/MWh.

Annual October contract

  • Q324 power moved 3.1% higher to £76/MWh.
  • The annual October 24 contract rose 1.4% to £83/MWh, 29.1% lower than the same time last year (£117/MWh).

Peak electricity

Forward curve comparison

  • Day-ahead peak power was up 8.2% to £82.25/MWh, following its baseload counterpart higher.
  • July 24 peak power gained 3.5% at £80.5/MWh, and August 24 peak power increased 3.2% to £79.75/MWh.

Annual October contract

  • The annual October 24 peak power rose 2.0% to £96/MWh.
  • This is 45.1% lower than the same time last year (175/MWh).

Seasonal power prices

Seasonal baseload power contracts

  • All seasonal power contracts rose last week week, up on average by 1.4%.
  • Winter 24 and summer 25 expanded 1.4% and 1.3% respectively, rising to £88.50/MWh and £77.50/MWh.

Seasonal peak power curve

  • All seasonal peak power contracts went up last week week, up 2.1% on average.
  • Winter 24 and summer 25 peak power increased 1.2% and 3.0% respectively, falling to £102.75/MWh and £84.75/MWh.

Commodity price movements

Oil and coal

  • Opposing the bearish movements seen across the week previous, Brent Crude oil registered gains amid ongoing uncertainty regarding U.S. and China Consumer Price Index (CPI) data, finding bullish support from expectations that the summer vacation season will boost demand.
  • Moreover, gains were further supported as the US Energy Information Administration expects global demand to increase in the summer period, in tandem with a drop in US crude oil inventories last week.
  • However, stronger gains were limited by higher US inflation data, leading to weaker demand expected as economic growth remains impacted, and likely delay to a cut in the U.S. interest rate until December. Likewise, a new IEA report warning of excess supply in the future also limits stronger gains seen.

Carbon (UK and EU ETS)

  • Experiencing a similar trend to what was seen last week, UK ETS prices recorded gains across the reporting period whereas EU ETS prices showed losses – acting to narrow the price differential between the two schemes.
  • UK ETS carbon prices continued to find support from below-average temperatures leading to higher levels of heating demand on the system – in tandem with lower wind generation levels.
  • As a result, UK ETS carbon prices reached the highest level seen since October 2023, at £49.42/t on 13 June.
  • Opposing this, the EU ETS scheme traded lower on average, influenced by warmer weather across Europe, in tandem with sustained levels of wind generation.
  • It is expected that UK ETS carbon prices will remain relatively level in the week ahead, as greater wind generation projections are counterbalanced by below-average temperatures

Wholesale price snapshot – Friday-on Friday

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