Energy Wholesale Market Review – 17 November 2023

Headlines

It was a largely bearish week for gas and power contracts this week, continuing the trend of decreasing wholesale prices observed across much of 2023. Opposing this however, day-ahead gas rose 4.5% to 104.50p/th, despite being influenced by higher wind outturn projections for Monday acting to reduce gas-for-power demand. However, a notably short system offset losses this morning. Conversely, day-ahead power lost 3.2% to £90.00/MWh, with increasing wind generation projections acting to loosen system margins. Similarly, December 23 gas was down 1.9% at 114.60p/th, and January 24 gas decreased 3.4% to 121.20p/th. Most seasonal gas contracts fell this week too, however a 9.8% increase across the summer 26 gas contract led to seasonal gas prices increasing by 1.2% on average. Summer 24 and winter 24 gas dropped 1.9% and 1.3% respectively, subsiding to 115.80p/th and 131.00p/th. We observed a mixed adjustment across individual seasonal power contracts this week, up on average by 0.8%. Summer 24 and winter 24 power subsided 1.0% and 0.4% respectively, falling to £99.00/MWh and £118.00/MWh, whereas summer 25 and winter 25 rose 3.6% and 0.9% respectively, rising to £93.25/MWh and £106.50/MWh.

Baseload electricity

Forward curve comparison

  • Day-ahead power fell 3.2% to £90.00/MWh, amid a sharp increase in projected wind outturn for Monday, with further losses supported by a falling demand forecast.
  • December 23 power slipped 1.3% at £97.25/MWh and January 24 power decreased 4.7% to £111.00/MWh.

Annual October contract

  • Q124 power moved 3.5% lower to £110.75/MWh.
  • The annual April 24 contract lost 0.7% to £108.50/MWh, 50.3% lower than the same time last year (£218.50/MWh).

Peak electricity

Forward curve comparison

  • Day-ahead peak power was down 11.5% to £108.50/MWh, following its baseload counterpart lower.
  • December 23 peak power declined 5.7% at £115.33/MWh, and January 24 peak power decreased 7.1% to £134.74/MWh.

Annual October contract

  • The annual April 24 peak power fell 1.8% to £121.25/MWh
  • This is 50.0% lower than the same time last year (242.30/MWh).

Seasonal power prices

Seasonal baseload power contracts

  • Most seasonal power contracts boosted this week, up on average by 0.8%.
  • Summer 25 power rose 3.6% to £93.25/MWh, and winter 25 grew 0.9% to £106.50/MWh.

Seasonal peak power curve

  • Most seasonal peak power contracts declined this week, down 1.9% on average.
  • Summer 24 and winter 24 peak power dropped 2.5% and 1.2% respectively, falling to £105.75/MWh and £136.75/MWh.

Commodity price movements

Oil and coal

  • Overall, oil prices fell last week, as we continue to monitor a level of volatility in price – with competing market fundamentals shaping price movement.
  • As a result, we saw a 2.3% week-on-week decrease across Brent crude, with prices averaging $81.64/bl. Moreover, on 17 November, brent crude prices registered $78.25/bl – the lowest price since July 2023.
  • Brent crude prices were weighed last week, at least in part, by ongoing concerns around China’s weakening demand – fuelling concerns over future demand.
  • China remains the largest importer of Brent crude globally and therefore, any material shift in consumption can alter the trajectory of prices.
  • Further bearish pricing influences arose due to a rise in US crude inventories and production across the country being at record highs – acting to ease supply concerns.

Carbon (UK and EU ETS)

  • Like many other global commodity markets, carbon prices continue to respond sensitively to wider geopolitical uncertainty.
  • For the UK more specifically however, lower levels of wind generation, seen as the week progressed, eased demand from fossil fuel fired assets to meet demand
  • Likewise, a certain amount of price support remained in place from progressively colder temperatures both in the UK and the EU – acting to increase heating demand both domestically and across the EU during the reporting period.
  • This resulted in an overall bullish trend across carbon prices, with EU ETS carbon growing 2.7% to €78.73/t and experiencing a monthly high of €81.35/t on the 14 November, and UK ETS carbon experiencing a larger week-on-week increase of 6.4% to 42.32/t.

Wholesale price snapshot – Friday-on Friday

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