This week saw the continuation of lowering gas and power prices, extending upon bearish price movements observed in the previous week, including longer term contracts. We observed above average temperatures for large periods across the reporting window – acting to supress gas and power demand. As a result, day-ahead gas fell 14.6% to 67.50p/th following strong gas storage levels, lower demand, and a steady supply of LNG continuing to reach UK ports. Day-ahead power declined 11.0% to £76.50/t, following the bearish movements of its equivalent gas contract, coupled with periods of high renewable output. June 23 gas was down 14.1% at 68.00p/th, and July 23 gas decreased 14.6% to 67.50p/th. All seasonal gas contracts declined last week, down by 9.2% on average, while both winter 23 and summer 24 gas dropped 10.8% and 9.0% respectively, subsiding to 124.50p/th and 122.00p/th. Similar to gas, all seasonal power contracts saw losses this week, down on average by 4.4%, as winter 23 power decreased 6.0% to £141.50/MWh, while summer 24 fell 5.0% to £115.00/MWh.
Forward curve comparison
- Day-ahead power lowered 11.0% to £76.50/MWh, following a rise in wind generation levels, along with easing demand levels and continued downturn in gas prices.
- June 23 power slipped 6.8% to £82.00/MWh and July 23 power decreased 4.3% to £88.00/MWh.
Annual October contract
- Q323 power moved 5.4% lower to £91.25/MWh.
- The annual October 23 contract lost 5.5% to £128.25/MWh, 16.4% lower than the same time last year (£153.5/MWh).
Forward curve comparison
- Day-ahead peak power fell 9.6% to £82.50/MWh, following its baseload counterpart.
- June 23 peak power declined 6.9% at £87.25/MWh, and July 23 peak power decreased 9.2% to £91.5/MWh.
Annual April contract
- The annual October 23 peak power rose 5.1% to £157.88/MWh.
- Despite these gains, the price point remains 7.4% lower than the same time last year (170.5/MWh).
Seasonal power prices
Seasonal baseload power contracts
- All seasonal power contracts sank this week, down on average by 4.4%.
- Winter 23 power decreased 6.0% to £141.50/MWh, while summer 24 fell 5.0% to £115.00/MWh.
Seasonal baseload power curve
- All Seasonal peak power contracts also saw losses this week, easing 5.3% on average.
- Winter 23 and summer 24 peak power shrank 4.1% and 6.6% respectively, falling to £187.50/MWh and £128.25/MWh.
Commodity price movements
Oil and coal
- Brent crude oil registered a marginal drop of 0.9% following anticipation of an increase in the US debt ceiling. An unexpected rise in US crude inventories countered a tighter supply outlook for later in the year.
- A tighter market is expected into the future as China’s demand for oil grows at a faster-than-expected pace – impacting global supply levels
- However, this is somewhat offset by mild demand across Europe and North America as the latter struggles with financial situations – such as the rising debt ceiling.
Carbon (UK and EU ETS)
- Both ETS schemes registered drops this week, as the EU ETS saw a minor reduction of 0.2% to average €88.13/t and the UK ETS saw prices drop 1.7% to average £59.02/t following increased wind generation levels leading to a relaxing of system margins. Prices may be weighed upon by increasing temperature forecasts, leading to lower gas-for-power demand.
- On 15 May, the European Commission published the total number of allowances in circulation on the EU carbon market in 2022 – which determines the functioning of the Market Stability Reserve (MSR) of the scheme.
- From 1 September 2023 to 31 August 2024 a total of 272,350,737 allowances will be placed in the MSR – acting to reduce supply