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Energy Wholesale Market Review, 10 July 2020

Headlines

Mixed movements were observed this week for near-term gas and power prices. Day-ahead gas fell 7.0% to 13.25p/th, following an oversupplied system. Day-ahead power rose 18.3% to £30.75/MWh, amid periods of low wind output and power demand recovery following the easing of lockdown restrictions. August 20 gas was down 8.3% at 13.78p/th, and September 20 gas decreased 3.4% to 16.6p/th. All seasonal gas contracts rose this week, up by 2.1% on average, while winter 20 and summer 21 gas increased 3.1% and 1.1% respectively, lifting to 34.14p/th and 31.33p/th. Seasonal power contracts boosted this week, up on average by 2.4%, as winter 20 and summer 21 expanded 2.8% and 1.8% respectively, rising to £46.5/MWh and £42/MWh. EU ETS carbon prices leapt 8.0% this week to average €28.7/t, reaching a near 12-month high amid strong trading activity. Brent crude oil experienced growth this week, rising 2.0% to average $42.7/bl, up from $41.9/bl the previous week.

Baseload electricity
Day-ahead power rose 18.3% to £30.75/MWh, following a steady rise in demand, coupled with periods of low wind generation. August 20 power climbed 0.3% at £32.2/MWh and September 20 power decreased 0.6% to £34.79/MWh.		Q420 power moved 2.2% higher to £44.01/MWh. The Annual October 20 contract rose 2.3% to £44.25/MWh, 19.1% lower than the same time last year (£54.69/MWh).
Forward curve comparison		Annual October Contract
Peak electricity
Day-ahead peak power was down 0.8% to £32.5/MWh. August 20 peak power gained 0.9% at £36.89/MWh, and September 20 peak power increased 0.8% to £40.03/MWh.		The annual October 20 peak power lost 1.5% to £50.37/MWh. This is 17.8% lower than the same time last year (61.31/MWh).
Forward curve comparison		Annual October contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
Seasonal power contracts boosted this week, up on average by 2.4%. Winter 20 and summer 21 expanded 2.8% and 1.8% respectively, rising to £46.5/MWh and £42/MWh.		Seasonal peak power contracts rose higher this week, up 2.1% on average. Winter 20 and summer 21 peak power increased 1.0% and 2.2% respectively, falling to £54.35/MWh and £46.39/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude oil experienced growth this week, rising 2.0% to average $42.7/bl, up from $41.9/bl the previous week. Oil prices started the week at $43.37/bl, though settled lower at the end of the week at $41.44/bl. Tighter supplies helped to support prices at the start of the week, despite news of fresh COVID-19 cases being detected across a number of countries. The US rig count fell by three rigs early in the week, dipping down to total 185. However, growth has been pegged back by fears that new COVID-19 cases could led to fresh lockdown measures, which would overall halt demand recovery. API 2 coal prices extended upon the previous week’s growth, rising 0.5% to average $58.1/t.		EU ETS carbon prices increased week-on-week, growing 8.0% this week to average €28.7/t. On 7 July, carbon prices reached €29.4/t, a near 12-month high, amid strong speculator-driven trading activity, despite weak fundamentals Market prices were supported mid-week as the European Parliament’s environment committee adopted a report to extend the scope of the EU ETS to the shipping sector. This signalled the prospect of increased future demand for EUAs.
Wholesale price snapshot