Energy Wholesale Market Review, 11 May 2020

Headlines

GB power and gas prices saw mixed movements last week, with several gains in contracts which had previously seen sustained losses amid the COVID-19 outbreak. Day-ahead gas (for delivery last Friday) rose 10.3% to 15.00p/th despite much warmer weather towards the end of last week. The day-ahead power contract followed gas movements and rose 2.0% to £25.75/MWh. June 20 gas was up 4.7% at 14.40p/th, and July 20 gas increased 0.3% to 15.30p/th. The majority of seasonal gas contracts also boosted last week, up by 0.9% on average, supported by an underlying rise in LNG and oil prices. Winter 20 and summer 21 gas contracts rose 2.4% and 1.8% respectively, lifting to 32.52p/th and 29.11p/th. All seasonal power contracts boosted last week, up on average by 0.9% as winter 20 and summer 21 expanded 1.4% and 1.0% respectively, rising to £41.15/MWh and £36.20/MWh. Brent crude oil rose by 32.1% to $29.53/bl as a rise in tensions between Donald Trump and Xi Jinping helped to support prices, with the first phase of the trade deal between China and the US now all but nullified by the spreading of the coronavirus. EU ETS carbon prices fell 4.3% to average €19.19/t as demand for EUAs was slightly muted on bank holidays across Europe last week. API 2 coal prices remained just below $53/t as the commodity continues to show little movement when compared to oil, carbon and LNG prices.

Baseload electricity
  • Day-ahead power rose 2.0% to £25.75/MWh as the gradual easing of lockdown restrictions will begin to see a rise in energy demand.
  • June 20 power remained at £25.85/MWh and July 20 power increased 0.5% to £27.25/MWh.
  • Q320 power moved 0.2% higher to £29.15/MWh.
  • The Annual October 20 contract rose 1.2% to £38.68/MWh, but was 24.8% lower than the same time last year (£51.46/MWh).

Forward curve comparison

Baseload electricity Forward curve comparison 11 May 2020

Annual October Contract

Baseload electricity Annual October contract 11 May 2020

Peak electricity
  • Day-ahead peak power was up 1.9% to £26.75/MWh, following its baseload counterpart.
  • June 20 peak power declined 0.8% to £28.90/MWh, and July 20 peak power decreased 0.9% to £30.70/MWh.
  • The Annual October 20 peak power contract gained 2.0% to 44.31/MWh.
  • This is 23.2% lower than the same time last year (57.67/MWh).

Forward curve comparison

Peak electricity Forward curve comparison 11 May 2020

Annual October contract

Peak electricity Annual October contract 11 May 2020

Seasonal power prices

Seasonal baseload power contracts

Seasonal power prices Seasonal baseload power contracts 11 May 2020

Seasonal baseload power curve

Seasonal power prices Seasonal baseload power curve 11 May 2020

  • All seasonal power contracts boosted last week, up on average by 0.9%.
  • Winter 20 and summer 21 expanded 1.4% and 1.0% respectively, rising to £41.15/MWh and £36.20/MWh.
  • Seasonal peak power contracts were mixed last week, but on average rose by 1.5%.
  • Winter 20 and summer 21 peak power increased 2.0% and 2.0% respectively, rising to £47.87/MWh and £40.75/MWh.
Commodity price movements

Oil and Coal

Commodity price movements Oil and coal 11 May 2020

Carbon

Commodity price movements Carbon 11 May 2020

  • Brent crude oil prices rose 32.1% last week to average $29.53/bl, closing the week close to $32/bl as prices were supported by several bullish factors.
  • A rise in tensions between Donald Trump and Xi Jinping helped to support prices as the first phase of the trade deal between China and the US has been all but nullified by the spreading of the coronavirus.
  • A breakdown in relations could see China looking to other markets to purchase energy, which they had been contracted to buy from the US.
  • Prices slipped early this Monday morning, however, the markets began to weigh up the possibility of a second wave of infections of the coronavirus.
  • The first new cases have been reported in Wuhan since lockdown measures were lifted nearly a month ago, and rates of infection have since been rising in Germany and South Korea since their respective lockdown measures were lifted.
  • EU ETS carbon prices fell 4.3% to average €19.19/t. Demand for EUAs was slightly muted on bank holidays across Europe last week.
  • API 2 coal prices remained just below $53/t as the commodity continues to show little movement when compared to oil, carbon and LNG markets.
  • Demand in NE Asia will have been helped slightly by a rise in LNG prices in the past week, making coal relatively more economical to purchase for electricity generation.
Wholesale price snapshot

Wholesale price snapshot 11 May 2020

Posted by TEAM on 11 May 2020
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