Energy Wholesale Market Review, 1 October 2021

Headlines

This week represented another bullish week for gas and power contracts, with significant gains most pronounced in shorter-term contracts. Day-ahead gas rose 35.5% to 225.00p/th, continuing to benefit from an on-going tighter global gas supply outlook. The day-ahead contract also reached a record high on 1 October at 225.00p/th. Day-ahead power trends mirrored the gas counterpart, subsequently rising 55.8% to £215/MWh, with the bullish price point set in short-term gas contracts supporting power prices. This was further exacerbated by lowering wind outturn as the week matured. November 21 gas was up 36.2% at 249.26p/th, and December 21 gas increased 37.2% to 255.10p/th. Most seasonal gas contracts lifted this week, up by 8.6% on average, while both summer 22 and winter 22 gas increased 25.9% and 24.0% respectively, lifting to 116.00p/th and 118.29p/th. The majority of seasonal power contracts also boosted this week, up on average by 16.2%, as summer 22 and winter 22 expanded 22.4% and 20.6% respectively, rising to £120.00/MWh and £123.00/MWh.

Baseload electricity
  • Day-ahead power rose 55.8% to £215/MWh, following gas contracts higher on the near-curve and benefitting from lowering wind outturn as the week progressed.
  • November 21 power climbed 25.6% at £250/MWh and December 21 power increased 22.9% to £245/MWh.
  • Q122 power moved 37.5% higher to £240/MWh.
  • The annual April 22 contract rose 21.5% to £121.5/MWh, 160.4% higher than the same time last year (£46.66/MWh).
Forward Curve Comparison

 

Annual October Contract

Peak electricity
  • Day-ahead peak power was up 55.6% to £235.00/MWh, following its baseload counterpart higher.
  • November 21 peak power gained 34.3% at £325/MWh, and December 21 peak power increased 27.0% to £291.45/MWh.
  • The annual April 22 peak power price rose 28.4% to £132.5/MWh
  • This is 147.6% higher than the same time last year (53.52/MWh).

Forward curve comparison

 

Annual October contract

 

Seasonal power prices

Seasonal baseload power contracts

 

Seasonal baseload power curve

 

  • Most seasonal power contracts boosted this week, up on average by 16.2%.
  • Summer 22 and winter 22 expanded 22.4% and 20.6% respectively, rising to £120.00/MWh and £123.00/MWh.
  • Most seasonal peak power contracts lifted this week, up 14.5% on average.
  • Summer 22 and winter 22 peak power increased 23.2% and 33.5% respectively, rising to £125.00/MWh and £140.00/MWh.
Commodity price movements

Oil and Coal

 

Carbon

  • Brent crude prices rose again this week, up 4.5% to $79.93/bl, maintaining a strong price point by comparison to a year prior. Prices are now over 90% higher than the same time a year ago.
  • The supply market generally remains tight for Brent crude oil, fueling higher prices.
  • This on-going tightness is also driven by 2-year lows in Singapore fuel stocks and the evacuation of Mongstad oil refinery in Norway after reports of a gas leak.
  • It was a bullish week for carbon markets. The UK ETS market experienced significant price rises, up 28.4% on the week prior to average £73.22/t, also reaching a record high since the scheme’s inception back on 19 May, at £75.50/t on 29 September. The EU ETS experienced similar upward trends, rising 3.5% to €62.16/t.
  • Colder temperatures have increased the demand for fossil fuel generation, as well as on-going higher auction demand.
Wholesale price snapshot 

 

Posted by TEAM on 1 October 2021
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