Energy Wholesale Market Review, 1 May 2020

Headlines

Most power and gas contracts fell this week as the UK remained under lockdown, muting demand across the country. Day-ahead gas was an exception and rose 20.9% to 13.60p/th following slightly lower temperatures towards the end of the week. Day-ahead power opposed gas and fell 1.4% to £25.25/MWh as a result of higher wind generation forecasts. June 20 gas was up 0.1% at 13.75p/th, while July 20 gas decreased 0.3% to 15.25p/th. All seasonal gas contracts declined this week, down by 1.3% on average. Winter 20 and summer 21 gas dropped 0.9% and 0.7% respectively, subsiding to 31.75p/th and 28.60p/th. All seasonal power contracts followed gas prices down, slipping on average by 1.7%. Winter 20 power decreased 1.0% to £40.60/MWh, while summer 21 fell 1.5% to £35.85/MWh. Brent crude oil prices rose 2.1% to average $22.35/bl, as the ease of lockdown restrictions in several countries around the world and the build-up to oil production cuts in May helped to support prices. Starting the week at around $21/bl, Brent crude prices fell back under $20/bl the following day on reports that global storage was reaching near maximum capacity. EU ETS carbon prices did not follow oil prices and ultimately fell 2.6% to average €20.05/t. Carbon prices dropped with lower demand in EUA auctions as a result of a national holiday across most of Europe on 1 May.

Baseload electricity
  • Day-ahead power fell 1.4% to £25.25/MWh on a rise in wind generation towards the end of the week.
  • June 20 power slipped 0.5% at £25.85/MWh and July 20 power decreased 12.1% to £24.40/MWh.
  • Q320 power moved 1.4% lower to £29.10/MWh
  • The Annual October 20 contract lost 1.2% to £38.23/MWh, 24.5% lower than the same time last year (£50.61/MWh).

Forward curve comparison

Baseload electricity Forward curve comparison 1 May 2020

Annual October Contract

Baseload electricity Annual April contract 1 May 2020

Peak electricity
  • Day-ahead peak power followed its baseload counterpart down, falling 2.2% to £26.50/MWh.
  • June 20 peak power declined 0.9% at £29.12/MWh, and July 20 peak power decreased 1.9% to £30.98/MWh.
  • The Annual October 20 peak power lost 1.9% to 43.45/MWh.
  • This is 23.9% lower than. the same time last year (57.08/MWh).

Forward curve comparison

Peak electricity Forward curve comparison 1 May 2020

Annual October contract

Peak electricity Annual April contract 1 May 2020

Seasonal power prices

Seasonal baseload power contracts

Seasonal power prices Seasonal baseload power contracts 1 May 2020

Seasonal baseload power curve

Seasonal power prices Seasonal baseload power curve 1 May 2020

  • All seasonal power contracts declined this week, down on average by 1.7%.
  • Winter 20 power decreased 1.0% to £40.60/MWh, while summer 21 fell 1.5% to £35.85/MWh.
  • All seasonal peak power contracts declined this week, down 2.0% on average.
  • Winter 20 and summer 21 peak power dropped 1.1% and 2.8% respectively, falling to £46.92/MWh and £39.97/MWh.
Commodity price movements

Oil and Coal

Commodity price movements Oil and coal 1 May 2020

Carbon

Commodity price movements Carbon 1 May 2020

  • Brent crude oil prices rose 2.1% to average $22.35/bl this week, as the ease of lockdown restrictions in several countries around the world and the build-up to oil production cuts in May supported prices.
  • Starting the week at around $21/bl, Brent crude prices dropped back under $20/bl the following day on reports that global storage was reaching near maximum capacity.
  • Prices were bolstered midweek by indications from the IEA that US crude inventories had risen by less than expected.
  • Brent prices continued to rose late this week as Donald Trump threatened to revoke military support for Saudi Arabia, should they choose not to cut oil production.
  • With the interests of the US shale industry, the US president told Saudi Arabian leaders: “We are defending your industry while you’re destroying ours.”
  • API 2 coal saw losses this week, falling 2.8% to average $52.60/t, as demand for the commodity continues to slide.
  • Coal demand has been particularly affected by the fall in LNG prices, which has seen a switch in coal to gas buying in the Asian market.
  • EU ETS carbon prices did not follow oil prices last week and ultimately fell 2.6% to average €20.05/t
  • Carbon prices dropped with lower demand in EUA auctions as a result of a national holiday across most of Europe on 1 May.
Wholesale price snapshot

Wholesale price snapshot 1 May 2020

Posted by TEAM on 1 May 2020
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