Energy Wholesale Market Review, 1 March 2019

Headlines

This week, wholesale power and gas contracts experienced mixed movements, as most contracts beyond the month-ahead rose week-on-week. Day-ahead power and gas contracts have fallen week-on-week amid record high winter temperatures and comfortable gas supplies, despite low wind generation during the week. Nearly all baseload power contracts rose week-on-week. Day-ahead power was an exception, falling 2.2% to end the week at £48.0/MWh, amid forecasts of high wind generation next week. The contract followed its gas counterpart lower early in the week, hitting a fresh eight-month low of £47.3/MWh on 25 February despite low wind generation forecast the following day. Seasonal power contracts reversed the previous week’s losses, gaining 1.6% on average. Both summer and winter 19 power rose 1.4% to £48.5/MWh and £58.4/MWh, respectively. Gas contracts experienced mixed movements. Near-term gas contracts out to Q219 fell week-on-week, whilst seasonal contracts beyond and including winter 19 rose. Near-term gas prices have been weighed on by comfortable gas supplies amid the arrival of several LNG tankers, record warm temperatures, and strong supplies from UKCS and Norway. Day-ahead gas dropped 1.2% to end the week at 44.2p/th. The contract dropped to a fresh 17-month low of 43.9p/th on 25 February. Seasonal gas contracts rose 0.3% on average, with all contracts except summer 19 increasing week-on-week. Summer 19 gas was unchanged at 44.7p/th.

Baseload electricity
  • Day-ahead power fell 2.2% to £48.0/MWh. The contract hit a fresh eight-month low of £47.3/MWh on 25 February.
  • April 19 power was unchanged at £47.9/MWh, whilst May 19 power lifted 0.6% to £47.5/MWh.
  • Annual April 19 power rose 1.4% to £53.5/MWh.
  • The contract is 4.2% below the same time last month when it was £55.8/MWh, but 23.3% above the same time last year when it was £43.4/MWh.

Forward curve comparison

Baseload electricity Forward curve comparison 1 March 2019

Annual April Contract

Baseload electricity Annual April contract 1 March 2019

Peak electricity
  • Day-ahead peak power fell 3.6% to £51.0/MWh, just £3.0/MWh above its baseload counterpart.
  • Day-ahead peak power is 38.2% lower than the same time last year when it was £82.5/MWh.
  • April 19 peak power slipped 0.1% to £50.6/MWh, £2.7/MWh above its baseload counterpart.
  • Annual April 19 peak power increased 3.3% to £58.9/MWh, £5.4/MWh above its baseload power counterpart.
  • The contract was 3.9% below its price last month (£61.2/MWh), but 22.9% higher than its value last year (£47.9/MWh).

Forward curve comparison

Peak electricity Forward curve comparison 1 March 2019

Annual April contract

Peak electricity Annual April contract 1 March 2019

Seasonal power prices

Seasonal baseload power contracts

Seasonal power prices Seasonal baseload power contracts 1 March 2019

Seasonal baseload power curve

Seasonal power prices Seasonal baseload power curve 1 March 2019

  • Seasonal power contracts reversed the previous week’s losses, gaining 1.6% on average.
  • Both summer and winter 19 power rose 1.4% to £48.5/MWh and £58.4/MWh, respectively.
  • All seasonal peak power contracts went up this week, increasing by 1.3% on average.
  • The summer 19 peak contract was 1.3% higher at £52.4/MWh, £3.9/MWh above its baseload power counterpart.
Commodity price movements

Oil and Coal 

Commodity price movements Oil and coal 1 March 2019

Carbon

Commodity price movements Carbon 1 March 2019

    • Brent crude oil slipped 1.0% to average $66.0/bl.
    • Oil prices fell from the previous week’s three-month high following tweets from US President Donald Trump, which said “Oil prices getting too high. OPEC, please relax and take it easy.”
    • Although this resulted in a downturn in oil prices, Saudi Arabian Energy Minister Khalid al-Falih responded that the group were “taking it easy” and said “the 25 countries are taking a very slow and measured approach. […] we are interested in market stability first and foremost.”
    • API 2 coal prices rose for a second consecutive week, up 1.9% to average $79.4/t.
    • Coal ended the week at a three-week high of $80.8/t.
  • EU ETS carbon prices rose 1.8% to average €20.3/t.
  • Within-day carbon prices had started the week at €18.5/t, the lowest since 6 December 2018, however prices recovered to end the week just below €22.0/t.
  • Prices were supported last week by heavy buying from emitters ahead of the 30 April deadline to submit EUAs to cover last year’s emissions.
  • Generally, carbon prices have been pressured by warmer weather reducing demand for conventional power generation, a fall in gas prices, uncertainty around the UK’s future carbon policy post-Brexit, and by news of Germany’s coal phaseout.
  • As weather nears seasonal normal temperatures in March, demand for conventional power generation is expected to increase EUA buying across Europe.
Wholesale price snapshot

Wholesale price snapshot 1 March 2019

Posted by TEAM on 4 March 2019
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