Energy Wholesale Market Review – 22 December 2023

Headlines

This week, most power and gas wholesale contracts rose, reversing the overall bearish movement seen across contracts throughout 2023 to date. Day-ahead gas rose 2.3% to 77.00p/th, following declining wind generation forecasts, boosting gas-for-power demand. Day-ahead power rose 7.7% to £70.00/MWh, following its gas counterpart, with further gains supported by a strong drop in wind generation projections for next week as Storm Pia passes. January 24 gas was up 3.8% at 86.60p/th, and February 24 gas increased 3.8% to 87.60p/th. Most seasonal gas contracts declined last week, down by 19.2% on average; however, summer 24 and winter 24 gas increased 2.9% and 0.7% respectively, lifting to 86.40p/th and 103.20p/th. Most seasonal power contracts boosted this week, up on average by 4.6%, as summer 24 and winter 24 expanded 6.8% and 4.1% respectively, rising to £80.00/MWh and £97.10/MWh.

Baseload electricity

Forward curve comparison

  • Day-ahead power rose 7.7% to £70.00/MWh, following a strong drop in wind generation projections as Storm Pia passes, tightening system margins for Wednesday.
  • January 24 power climbed 8.0% to £86.10/MWh and February 24 power increased 6.4% to £87.50/MWh.

Annual October contract

  • Q124 power moved 5.9% higher to £85.50/MWh.
  • The annual April 24 contract rose 5.3% to £88.55/MWh, 56.3% lower than the same time last year (£202.50/MWh).

Peak electricity

Forward curve comparison

  • Day-ahead peak power dropped 20.4% to £72.81/MWh, opposing its baseload counterpart.
  • January 24 peak power gained 4.1% to £103.45/MWh, and February 24 peak power increased 0.2% to £105.50/MWh.

Annual October contract

  • The annual April 24 peak power contract rose 3.2% to £93.43/MWh.
  • This is 59.9% lower than the same time last year (£233.25/MWh).

Seasonal power prices

Seasonal baseload power contracts

  • All seasonal power contracts boosted this week, up on average by 4.6%.
  • Summer 24 and winter 24 climbed 6.8% and 4.1% respectively, rising to £80.00/MWh and £97.10/MWh.

Seasonal peak power curve

  • Mixed movements were seen across seasonal peak power contracts this week, down 2.6% on average.
  • Summer 24 gas increased 2.2% to £84.50/MWh, while winter 24 peak power dropped 7.3% to £102.35/MWh.

Commodity price movements

Oil and coal

  • Brent crude oil rose across the last week, increasing 4.5% to average $78.69/bl.
  • This increase was supported by global supply disruptions to trade routes via the Suez Canal following attacks from Yemeni Houthi militants, resulting in many companies to rerouting to avoid the risk of attack.
  • However, further gains were limited as concerns over sluggish demand following larger than expected U.S stocks of the commodity outweighed fears of global trade disruption from geopolitical tensions in the Middle East.
  • As a global commodity, oil will remain volatile as geopolitical events play out around the world. Prices are likely to remain stable in the near-term as decreased demand from China offsets supply cuts from OPEC+ countries.

Carbon (UK and EU ETS)

  • Last week saw a bullish trend across both carbon markets, with gains supported by the soon approaching expiry of the December auctions over the Christmas period, despite seeing higher wind generation, due to Storm Pia.
  • EU ETS carbon rose 7.8% to average €73.49/t, and UK ETS carbon increased 19.5% to average £40.16/t.
  • Prices are likely to continue rising with the upcoming expiry of the December auctions over the Christmas period – running from 13 December 2023 to 10 January 2024 for the UK ETS, while the last 2023 auction date EU ETS was held on 18 December.

Wholesale price snapshot – Friday-on Friday

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