Energy Wholesale Market Review, 11 October 2021

Headlines

It was a relatively mixed week for gas and power contracts this week, with the most pronounced losses seen on the far-curve, with near-term contracts continuing to hold onto unseasonably high price points. Day-ahead gas rose 2.2% to 230.00p/th, with the global gas supply outlook remaining notably tight. In Support, day-ahead prices reach their highest ever recorded levels, at 355.00p/th on 6 October  . Day-ahead power fell 0.9% to £213/MWh, but remains well above seasonal norms, buoyed by strong gains made in gas contracts and lowering wind outturn entering the weekend and next week. November 21 gas was up 2.9% at 256.43p/th, and December 21 gas increased 3.7% to 264.42p/th. Most seasonal gas contracts declined this week, down by 5.7% on average, while both summer 22 and winter 22 gas dropped 14.4% and 13.1% respectively, subsiding to 99.33p/th and 102.81p/th. Most seasonal power contracts declined this week, down on average by 3.1%, as summer 22 power decreased 12.1% to £105.50/MWh, while winter 22 fell 10.6% to £110.00/MWh.

Baseload electricity
  • Day-ahead power fell 0.9% to £213/MWh, following but remains well above seasonal normal prices, driven by lower renewable output and higher gas prices.
  • November 21 power climbed 2.0% at £255/MWh and December 21 power increased 2.0% to £250/MWh.
  • Q122 power moved 8.3% higher to £260/MWh.
  • The annual April 22 contract lost 11.3% to £107.75/MWh, 124.9% higher than the same time last year (£47.9/MWh).
Forward Curve Comparison

 

Annual October Contract

Peak electricity
  • Day-ahead peak power remained the same at £235.00/MWh, holding on to its elevated price point.
  • November 21 peak power declined 6.2% at £305/MWh, and December 21 peak power increased 2.6% to £299/MWh.
  • The annual April 22 peak power rose 2.6% to £136/MWh
  • This is 151.6% higher than the same time last year (54.05/MWh).

Forward curve comparison

 

Annual October contract

 

Seasonal power prices

Seasonal baseload power contracts

 

Seasonal baseload power curve

 

  • Most seasonal power contracts declined this week, down on average by 3.1%.
  • Summer 22 power decreased 12.1% to £105.50/MWh, while winter 22 fell 10.6% to £110.00/MWh.
  • Most seasonal peak power contracts boosted this week, up 1.1% on average.
  • Summer 22 power dropped 12.1% to £105.50/MWh, while winter 22 peak power increased 9.3% to £153.00/MWh.
Commodity price movements

Oil and Coal

 

Carbon

  • Brent crude prices rose again this week, up 2.9% to $81.21/bl. Prices also reached a three-year high on 8 October, at $83.19/bl.
  • The global picture of Brent crude remains tight. Higher demand profiles across many global markets with less supply has provided a strong undercurrent of support to price over the last fortnight.
  • For this week in particular, the market also responded to news that OPEC+ would not be looking to increase supply volumes to the market in response to combat market tightness.
  • The strong bullish sentiment for carbon markets softened this week.
  • Subsequently, the UK ETS fell 9.8% lower to £66.08/t with the EU ETS falling 0.2% to €62.02/t.
  • Wider bullishness from Brent crude markets did lend some support to carbon markets in part, but was offset by what continues to be a particularly volatile period for wholesale markets, discouraging thermal generation and investor buying in a costly marketplace
Wholesale price snapshot 

 

Posted by TEAM on 11 October 2021
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