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Energy Wholesale Market Review, 12 February 2021

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It has been a largely bearish week for both gas and power contracts, with some exceptions in seasonal summer contracts on the forward curve. Day-ahead gas fell 13.6% to 46.00p/th, with an oversupplied system at the week’s start and higher temperatures forecast for next week. Day-ahead power fell 7.4% to £57.4/MWh, following the gas price lower, compounded by stronger levels of wind generation, particularly at the week’s end. March 21 gas was down 9.3% at 44.62p/th, and April 21 gas decreased 5.9% to 43.11p/th. Most seasonal gas contracts declined last week, down by 1.0% on average. Summer 21 and winter 21 gas dropped 3.9% and 2.9% respectively, subsiding to 41.48p/th and 50.60p/th. Most seasonal power contracts also declined this week, down on average by 0.2%, as summer 21 power decreased 2.0% to £52.43/MWh, while winter 21 fell 2.0% to £59.60/MWh. In contrast, Brent crude oil rose again last week, up 5.3% to average $60.82/bl. The Brent crude price broke yearly highs on consecutive days, the first being on Monday 8 February reaching $60.10bl. Over the following two days the price rose a further $1.45/bl to reach its weekly and new yearly high of $61.55/bl. EU ETS carbon prices grew last week, rising 8.6% to average €38.52/t. Prices hit an all-time high of €39.46/t on Thursday and were buoyed by investor speculation on future price trajectory.

Baseload electricity
Day-ahead power fell 7.4% to £57.4/MWh, following the gas curve lower and weighed upon by stronger wind generation at the week’s end. March 21 power slipped 6.1% at £55.4/MWh and April 21 power decreased 1.8% to £54.75/MWh.		Q221 power moved 4.6% lower to £53.74/MWh. The annual April 21 contract lost 2.0% to £56.02/MWh, which was 31.2% higher than the same time last year (£42.7/MWh).
Forward curve comparison		Annual April Contract
Peak electricity
Day-ahead peak power was down 6.6% to £63.50/MWh, following its baseload counterpart lower. March 21 peak power declined 1.1% at £62.11/MWh, and April 21 peak power decreased 2.0% to £58.74/MWh.		The annual April 21 peak power contract lost 1.5% to £63.08/MWh. This is 29.8% lower than the same time last year (48.6/MWh).
Forward curve comparison		Annual April contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
Most seasonal power contracts declined this week, down on average by 0.2%. Summer 21 power decreased 2.0% to £52.43/MWh, while winter 21 fell 2.0% to £59.60/MWh.		In contrast, all seasonal peak power contracts boosted this week, up 1.7% on average. Summer 21 and winter 21 peak power increased 1.4% and 1.6% respectively, up to £57.05/MWh and £69.10/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude oil rose again this week, up 5.3% to average $60.82/bl. The Brent crude price reached fresh highs this week, breaking yearly highs on consecutive days, the first being on Monday 8 February reaching $60.10bl. Over the following two days the price rose a further $1.45/bl to reach its weekly and new yearly high of $61.55/bl. The oil market continues to prosper in the wake of the global vaccination roll-out, in the hope this will alleviate concern in the market surrounding demand recovery. API 2 coal rose 1.3% from the previous week to average $67.18/t.		EU ETS carbon prices grew this week, rising 8.6% to average €38.52/t. Prices hit an all-time high of €39.46/t on Thursday, buoyed by investor speculation on future price trajectory as well as the cold-snap across the UK and parts of Europe last week. Developments were also made in the newly established UK ETS. On 11 February, government announced in an update to its guidance, Participating in the UK ETS, that the transactional auction reserve price of will rise £22/t (from £16/t), establishing a new minimum price for when auction commence. The update confirms that it will not change this reserve price until it is ultimately removed as the market matures.
Wholesale price snapshot