Energy Wholesale Market Review, 12 June 2020

Headlines

Contracts in the GB energy market saw mixed direction this week, as colder weather and easing lockdown restrictions added some upward pressure to prices. Day-ahead gas rose 7.8% to 13.75p/th on forecasts of higher gas-for-power owing to French nuclear outages next week. Day-ahead power rose 1.7% to £29.5/MWh and was also affected by the outages. July 20 gas was up 8.5% at 14.06p/th, and August 20 gas increased 2.3% to 14.71p/th. All seasonal gas contracts declined this week, down by 2.0% on average, while both winter 20 and summer 21 gas dropped 2.3% and 2.7% respectively, subsiding to 31.06p/th and 28.77p/th. Seasonal power contracts saw mixed direction this week, down on average by 0.6%,as winter 20 power decreased 0.8% to £42.52/MWh, while summer 21 fell 1.1% to £37.83/MWh. On average, Brent crude oil prices saw a 2.3% rise in prices this week up to $40.47/bl. Prices reached a 3-month high of $42.80/bl on 8 June, but fell back down to below $39/bl at the end of the week on fears of oversupply. Despite threats of supply disruptions in Libya concerns of oversupply weighed on prices throughout the week, falling notably on Friday due to reports of a rise in coronavirus cases in the US.

Baseload electricity
  • Day-ahead power rose 1.7% to £29.5/MWh following expectations of French nuclear outages next week.
  • July 20 power climbed 2.3% at £28.24/MWh and August 20 power increased 0.9% to £29.09/MWh.
  • Q320 power moved 0.9% higher to £29.5/MWh.
  • The annual October 20 contract lost 0.9% to £40.18/MWh, 20.7% lower than the same time last year (£50.69/MWh).

Forward curve comparison

Baseload electricity Forward curve comparison 12 June 2020

Annual October Contract

Baseload electricity Annual October contract 12 June 2020

Peak electricity
  • Day-ahead peak power was down 0.8% to £31/MWh, following its baseload counterpart higher.
  • July 20 peak power gained 1.8% at £31.16/MWh, and August 20 peak power increased 1.2% to £31.76/MWh.
  • The annual October 20 peak power lost 0.1% to £45.72/MWh.
  • This is 20.4% lower than the same time last year (£57.43/MWh).

Forward curve comparison

Peak electricity Forward curve comparison 12 June 2020

Annual October contract

Peak electricity Annual October contract 12 June 2020

Seasonal power prices

Seasonal baseload power contracts

Seasonal power prices Seasonal baseload power contracts 12 June 2020

Seasonal baseload power curve

Seasonal power prices Seasonal baseload power curve 12 June 2020

  • Seasonal power contracts saw mixed direction this week, but fell down on average by 0.6%.
  • Winter 20 power decreased 0.8% to £42.52/MWh, while summer 21 fell 1.1% to £37.83/MWh.
  • Most seasonal peak power contracts increased this week.
  • Winter 20 and summer 21 peak power increased 0.1% and 0.1% respectively, falling to £49.27/MWh and £42.16/MWh.
Commodity price movements

Oil and Coal

Commodity price movements Oil and Coal 12 June 2020

Carbon

Commodity price movements Carbon 12 June 2020

  • On average, Brent crude oil prices saw a 2.3% rise in prices this week up to $40.47/bl.
  • Prices reached a 3-month high of $42.80/bl on 8 June, but fell back down to below $39/bl at the end of the week on fears of oversupply.
  • Despite threats of supply disruptions in Libya concerns of oversupply weighed on prices throughout the week, falling notably on Friday due to reports of a rise in coronavirus cases in the US.
  • The recent shifts to the oil industry as a result of the pandemic has seen the Saudi Arabian share reach its highest since the 80’s, as was reported by J.P. Morgan this week.
  • Despite the Brent price falling towards the end of the week, Barclays Commodities Research raised their 2020 forecasts by $4/bl to $41/bl, expecting slow growth for the rest of the year.
  • API 2 coal prices rose to $54.40/t as short-term supply issues persist in Russia.
  • Prices will continue to follow trends in demand, however have Reuters reported that Australian imports into China could fall, despite hitting a two-year high in May.
  • EU ETS carbon prices rose a further 3.3% to average €22.39/t this week.
  • Colder weather this week supported carbon prices, as countries look to buyout emissions from increased energy generation.
Wholesale price snapshot

Wholesale price snapshot 12 June 2020

Posted by TEAM on 15 June 2020
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