Energy Wholesale Market Review – 21 July 2023

Headlines

 Most power and gas contracts rose this week, following low periods of wind outturn, flow interruptions from Norwegian gas fields and an outage at Tolmount gas field which restricted UK Continental Shelf flows, all acting to tighten system margins. Subsequently, day-ahead gas rose 6.7% to 71.50p/th, amid lower renewable forecast output for next week, increasing gas for power demand and tightening margins. Day-ahead power rose 5.0% to £84.00/MWh, following its gas counterpart higher, buoyed by increasing demand projections for next week. Similarly, August 23 gas was up 7.8% at 73.60p/th, and September 23 gas increased 4.4% to 76.50p/th. All seasonal gas contracts boosted last week, up by 4.5% on average, while both winter 23 and summer 24 gas increased 7.1% and 9.1% respectively, lifting to 128.50p/th and 132.00p/th. All seasonal power contracts boosted this week, up on average by 4.5%, as winter 23 and summer 24 expanded 2.5% and 4.5% respectively, rising to £122.00/MWh and £115.00/MWh.

Baseload electricity

Forward curve comparison

  • Day-ahead power rose 5.0% to £84.00/MWh, following reduced renewable output and increased demand forecasts into next week.
  • August 23 power was static at £77.00/MWh and September 23 power decreased 0.3% to £83.75/MWh

Annual October contract

  • Q423 power moved 3.1% higher to £115.00/MWh.
  • The annual October 23 contract rose 3.5% to £118.50/MWh, 47.6% lower than the same time last year (£226.00/MWh).

Peak electricity

Forward curve comparison

  • Day-ahead peak power was down 2.7% to £72.00/MWh, despite price rises observed from its baseload counterpart.
  • August 23 peak power gained 0.7% at £79.50/MWh, and September 23 peak power decreased 0.6% to £94.00/MWh.

Annual April contract

  • The annual October 23 peak power rose 6.2% to £134.83/MWh
  • This is 59.4% lower than the same time last year (332.00/MWh).

Seasonal power prices

Seasonal baseload power contracts

  • All seasonal power contracts boosted this week, up on average by 4.5%.
  • Winter 23 and summer 24 expanded 2.5% and 4.5% respectively, rising to £122.00/MWh and £115.00/MWh.

Seasonal baseload power curve

  • All Seasonal peak power contracts boosted this week, up 6.4% on average.
  • Winter 23 and summer 24 peak power increased 4.4% and 8.4% respectively, rising to £146.65/MWh and £123.00/MWh.

Commodity price movements

Oil and coal

  • Brent crude oil prices were virtually unchanged week-on-week.
  • Prices fell at the start of the week, primarily driven by the partial resumption of Libyan oil production and news of weaker than expected Chinese economic growth.
  • This trend had reversed by the end of the week, buoyed by expectations of tighter supplies with US crude inventories falling and Russia and Saudi Arabia to cut output in August.

Carbon (UK and EU ETS)

  • The disparity between the EU and UK ETS schemes continued to grow last week, with UK ETS falling to historic lows.
  • UK ETS prices fell to a near two-year low of £48.25/t on Friday. In contrast, EU ETS carbon reached a one-month high of €91.22/t.
  • The changes in average prices are largely attributed to the spike in UK ETS seen in the beginning half of the prior week following the government proposals to tighten the market from 2024.

Wholesale price snapshot – Friday-on Friday

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