Energy Wholesale Market Review – 20 May 2024

Headlines

Most tracked power and gas contracts rose last week, with day-ahead gas increasing 4.0% to 74.25p/th, following maintenance across the Barrow North and St Fergus NSNP gas terminals, impacting flows from the UK Continental Shelf. Likewise, day-ahead power prices on 17 May found support from higher UK gas-for-power demand projections for 20 May, in tandem with decreased flows across the Langeled pipeline due to maintenance. As a result, day-ahead power rose 5.4% to £71.65/MWh, as overall wind generation in the week ahead is set to be lower than the levels seen across the week ending 17 May. June 24 gas was up 12.1% at 74.25p/th, and July 24 gas increased 8.0% to 73.95p/th, with longer-term gas contracts finding support from increased Asian LNG demand. Moreover, all seasonal gas contracts boosted last week, up by 12.9% on average, with both winter 24 and summer 25 gas increasing 13.7% and 16.6% respectively, lifting to 94.10p/th and 87.75p/th. Similarly, all seasonal power contracts boosted this week, up on average by 2.6%, as winter 24 and summer 25 expanded 2.8% and 2.2% respectively, rising to £84.30/MWh and £77.15/MWh.

Baseload electricity

Forward curve comparison

  • Day-ahead power rose 5.4% to £71.65/MWh, as overall wind generation in the week ahead is set to be lower than the levels seen across the week ending 17 May. However, stronger gains were limited by above-average temperatures
  • June 24 power slipped 2.2% to £67.00/MWh, whereas July 24 power increased 1.3% to £69.65/MWh

Annual October contract

  • Q324 power moved 0.6% lower to £70.00/MWh
  • The annual October 24 contract rose 2.5% to £80.73/MWh, 33.3% lower than the same time last year (£121.00/MWh)

Peak electricity

Forward curve comparison

  • Day-ahead peak power was down 5.8% to £68.28/MWh, opposing the bullish movements registered across its baseload counterpart
  • Conversely, June 24 peak power gained 7.9%, rising to £76.40/MWh, and July 24 peak power increased 2.1% to £74.65/MWh

Annual October contract

  • The annual October 24 peak power rose 1.5% to £92.20/MWh
  • However, this is 47.5% lower than the same time last year (175.75/MWh)

Seasonal power prices

Seasonal baseload power contracts

  • All seasonal power contracts boosted last week, up on average by 2.6%
  • Winter 24 and summer 25 expanded 2.8% and 2.2% respectively, rising to £84.30/MWh and £77.15/MWh

Seasonal peak power curve

  • Most seasonal peak power contracts boosted last week, up 1.1% on average
  • Winter 24 gas increased 2.4% to £97.30/MWh, while summer 25 peak power dropped 0.1% to £81.65/MWh

Commodity price movements

Oil and coal

  • Brent crude remained relatively level week-on-week, dropping 0.5% to $82.94/bl as conflicting market fundamentals impacted the price of the commodity
  • Bearish influence came from news that Chinese demand remains sluggish as its producer price index (PPI) contracted in April, impacting total oil demand
  • Moreover, a reduction in the IEA oil demand growth forecast for 2024, due to weak demand forecasts for developed OECD nations, and turbulent US inflation data, provided further bearish influence
  • However, bullish sentiment arose due to expectations surrounding potential interest rate cuts and a decrease in crude inventories across the US, in tandem with greater global oil demand projections from OPEC+
  • Members of OPEC+ are scheduled to meet in June to decide on oil production across Q324, with market expectations outlining that oil production cuts will likely be extended

Carbon (UK and EU ETS)

  • Opposing movements were registered across the carbon markets, with gains seen across the UK ETS carbon prices, rising 2.7% to average £38.97/t whereas EU ETS prices saw downwards movements, falling 3.3% to average €69.64/t
  • Prices across the EU ETS were influenced by greater wind generation across central Europe, reducing the requirement for more carbon-intensive forms of power generation
  • Moreover, higher auction supply acted to put downwards pressure on EU ETS prices, offsetting the impact of no EUA auctions held on 15 May
  • UK ETS carbon prices were supported by maintenance across the UK Continental Shelf, which acted to increase gas prices. As a result, prices rose to the highest value seen since January 2024 at £41.25/t on 16 May – however stronger gains were prevented due to reduced gas-for-heating demand as temperatures remained above seasonal averages

Wholesale price snapshot – Friday-on Friday

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