Energy Wholesale Market Review – 9 June 2023

Headlines

This week largely represented strong bullish sentiment for wholesale gas and power contracts in GB, with some exceptions from seasonal power prices. Weighed on by colder temperatures early in the week, prices saw mixed movements until gains consolidated later in the week. Day-ahead gas rose 20.8% to 68.85p/th, following continued outages of several large Norwegian gas fields, acting to tighten system conditions slightly. However, strong and consistent levels of supply via LNG from the US and Qatar continue to help mitigate any further price rises across shorter dated contracts. July 23 gas was up 19.5% at 66.90p/th, and August 23 gas increased 16.3% to 71.90p/th. Similarly, Q323 gas moved 15.9% higher to 72.10p/th. Subsequently, day-ahead power rose 30.7% to £83.00/MWh, following lower wind outturn and increased levels of demand expected early next week and into the weekend – and also mirroring gains set from the GB gas market. Elsewhere, July 23 power climbed 13.6% at £81.75/MWh, and August 23 power increased 9.9% to £81.40/MWh. Q323 power moved 13.0% higher to £84.75/MWh.

Baseload electricity

Forward curve comparison

  • Day-ahead power rose 30.7% to £83.00/MWh, following its gas counterpart and increased demand
  • July 23 power climbed 13.6% at £81.75/MWh and August 23 power increased 9.9% to £81.40/MWh.

Annual October contract

  • Q323 power moved 13.0% higher to £84.75/MWh.
  • The annual October 23 contract rose 2.9% to £109.63/MWh, 34.7% lower than the same time last year (£168.00/MWh).

Peak electricity

Forward curve comparison

  • Day-ahead peak power was up 11.5% to £80.25/MWh, following its baseload counterpart higher.
  • July 23 peak power gained 11.9% at £85.08/MWh, and August 23 peak power increased 6.7% to £85.11/MWh

Annual April contract

  • The annual October 23 peak power rose 3.0% to £129.50/MWh
  • However, this is 38.1% lower than the same time last year (209.25/MWh).

Seasonal power prices

Seasonal baseload power contracts

  • Most seasonal power contracts boosted this week, up on average by 2.9%.
  • winter 23 and summer 24 expanded 3.5% and 2.3% respectively, rising to £119.50/MWh and £99.75/MWh.

Seasonal baseload power curve

  • All Seasonal peak power contracts declined this week, down 3.0% on average.
  • winter 23 and summer 24 peak power dropped 3.2% and 2.7% respectively, falling to £150.50/MWh and £108.50/MWh.

Commodity price movements

Oil and coal

  • Brent crude oil saw a price trend reversal from a fortnight ago, and has since registered a 3.4% uplift week-on-week to average $76.49/bl
  • This came following the OPEC+ announcement that a supply cut would be enacted from July, which will see the suspension of one million barrels per day from the market
  • However, amid Saudi Arabia’s announcement to extend output cuts to push the oil market into a shortfall, rising U.S reserves and weak export data from China acted to limit larger price gains

Carbon (UK and EU ETS)

  • Reversing the trend seen across the previous reporting period, both ETS schemes registered gains week-on-week as the EU ETS rose 2.0% to average €82.37/t, and the UK ETS grew 1.8% to £52.35/t
  • Prices saw gains week-on-week due to decreased temperatures, in tandem with notable drops across wind generation levels – acting to tighten system margins and boost demand for more expensive and carbon intensive forms of power generation.
  • Rising carbon prices were triggered by a significant squeeze in natural gas markets, following lower temperatures.

Wholesale price snapshot – Friday-on Friday

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