Energy Wholesale Market Review – 18 August 2023


This week, gas and power prices saw bullish sentiment further along the forward curve, as uncertainty surrounding Australian LNG supply remains elevated amid potential strike action that could impact European energy markets. However, across most short-term contracts, bearish prices trends were captured as day-ahead gas fell 4.1% to 82.00p/th, amid an oversupplied GB system. Conversely day-ahead power rose 1.1% to £88.00/MWh, opposing the bearish momentum seen in its equivalent gas contract, seeing low wind output across the week, in conjunction with growing power demand acting to tighten system margins. September 23 gas was down 2.1% at 92.00p/th, and October 23 gas increased 2.4% to 105.00p/th. Seasonal gas contracts boosted by an average of 3.8% this week, with winter 23 and summer 24 gas increasing 5.4% and 4.6% respectively, lifting both to 136.00p/th. Most seasonal power contracts traded higher this week, up on average by 2.9%, as winter 23 and summer 24 expanded 3.1% and 4.0% respectively, rising to £124.50/MWh and £116.50/MWh. Summer 25 remained level at £96.00/MWh.

Baseload electricity

Forward curve comparison

  • Day-ahead power rose 1.1% to £88.00/MWh, following low wind output during the week alongside increasing demand
  • September 23 power slipped 0.6% to £88.50/MWh while October 23 power increased 3.7% to £99.00/MWh

Annual October contract

  • Q423 power moved 2.6% higher to £117.00/MWh
  • Similarly, the annual October 23 contract rose 3.5% to £120.50/MWh, 70.6% lower than the same time last year (£410.00/MWh)

Peak electricity

Forward curve comparison

  • Day-ahead peak power was up 1.4% at £89.50/MWh, following its baseload counterpart higher
  • However, both September 23 and October 23 peak power declined 1.2% to £95.65/MWh and £109.08/MWh, respectively

Annual October contract

  • The annual October 23 peak power rose 4.4% to £135.13/MWh
  • This is 75.7% lower than the same time last year (555.25/MWh)

Seasonal power prices

Seasonal baseload power contracts

  • Most seasonal power contracts boosted this week, up on average by 2.9%, with summer 25 the exception, remaining level at £96.00/MWh
  • Winter 23 and summer 24 expanded 3.1% and 4.0% respectively, rising to £124.50/MWh and £116.50/MWh

Seasonal peak power curve

  • All seasonal peak power contracts boosted this week, up 4.5% on average
  • Winter 23 and summer 24 peak power increased 4.1% and 4.8% respectively, rising to £1417.25/MWh and £123.00/MWh

Commodity price movements

Oil and coal

  • Brent crude ended its recent bullish week-on-week price adjustment during this reporting period, registering a 1.1% drop to average $85.01/bl
  • The commodity registered losses amid ongoing demand growth concerns, amid concerns that Chinese interest rate reductions are not substantial enough to jumpstart growth. This has acted to outweighing the impact of recent tightening of global supply
  • Similarly, concerns surrounding weakened fuel demand were bolstered following potential US interest rate hikes
  • However, it is important to highlight the impact of OPEC+ supply cuts as global supply remains constricted, limiting losses registered
  • As Chinese demand grows into 2023, the pricing environment may favour a bullish trend due to the interconnected nature of Chinese economic growth and oil prices. However, due to the uncertain outcome of this, Brent crude prices are set to remain volatile into the future

Carbon (UK and EU ETS)

  • UK ETS prices opposed their recent downward trend and registered a 0.9% increase, to average £40.87/t during this reporting period. This has arisen due to upwards pressure across gas contracts following potential strike action at Australian LNG terminals
  • However, decreased carbon-intensive power generation across the UK, and industrial demand trending below average continue to act to cap gains
  • EU ETS carbon also registered a week-on-week gain, experiencing a 3.8% rise to €87.75/t, as increased forward hedging of EU carbon allowances provides a bullish signal for prices to follow
  • Similarly, low trading at the peak of the summer break provided strength to prices as the market extended gains
  • Although EU ETS prices have seen gains recently, it is anticipated that this trend will turn bearish in the latter half of 2023 as industrial and power demand continue to remain volatile, in tandem with the switch from coal-to-gas fuel weakening demand

Wholesale price snapshot – Friday-on Friday

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