Energy Wholesale Market Review, 13 March 2020

Headlines

Most near-term power and gas contracts rose this week, while longer term forward contracts declined on the expected influence of the coronavirus on consumption and the wider economy. Day-ahead gas rose 6.6% to 26.00p/th, on forecasts that temperatures will drop from the seasonally high levels seen this week. Day-ahead power rose 9.8% to £36.50/MWh, following forecasts of low wind generation next week. April 20 gas was up 11.5% at 24.74p/th, and May 20 gas increased 10.5% to 24.53p/th. Seasonal gas contracts were mixed this week, down by 0.7% on average, despite summer 20 and winter 20 gas increasing 9.5% and 0.4% to 25.06p/th and 35.78p/th, respectively. Seasonal power contracts were also mixed this week, down on average by 0.2%, as summer 20 and winter 20 climbed 4.9% and 0.8% respectively, rising to £35.08/MWh and £43.57/MWh. Brent crude oil fell 30.6% to $35.52/bl as oil prices suffered the worst crash since the Gulf war in 1991. Prices opened 26% lower at $35.57/bl on 9 March, reacting to the outcome of the OPEC meeting where Russia refused to agree to deeper cuts to oil supply. EU ETS carbon prices also followed oil and lost 2.3% to average €23.18/t this week as less oil consumption has seen a drop in demand for ETS certificates. API 2 coal followed oil and dropped, slipping 3.5% to average $55.39/t with price changes in line with global market movements.

Baseload electricity
  • Day-ahead power rose 9.8% to £36.50/MWh, following forecasts of low wind generation next week.
  • April 20 power climbed 5.5% to £34.85/MWh and May 20 power increased 2.9% to £35.00/MWh.
  • Q220 power moved 4.6% higher to £35.02/MWh.
  • The Annual April 20 contract rose 2.6% to £39.33/MWh, 21.5% lower than the same time last year (£50.12/MWh).

Forward curve comparison

Baseload electricity Forward curve comparison 13 March 2020

Annual October Contract

Baseload electricity Annual April contract 13 March 2020

Peak electricity
  • Day-ahead peak power followed its baseload counterpart and was up 0.3% to £38.35/MWh.
  • April 20 peak power gained 3.2% to £36.64/MWh, and May 20 peak power increased 3.4% to £37.57/MWh.
  • The Annual April 20 peak power contract lost 0.4% to 44.08/MWh.
  • This is 21.0% lower than the same time last year (55.82/MWh).

Forward curve comparison

Peak electricity Forward curve comparison 13 March 2020

Annual October contract

Peak electricity Annual April contract 13 March 2020

Seasonal power prices

Seasonal baseload power contracts

Seasonal power prices Seasonal baseload power contracts 13 March 2020

Seasonal baseload power curve

Seasonal power prices Seasonal baseload power curve 13 March 2020

  • Seasonal power contracts were mixed this week, down on average by 0.2%.
  • Summer 20 and winter 20 gained 4.9% and 0.8% respectively, rising to £35.08/MWh and £43.57/MWh.
  • All seasonal peak power contracts also rose this week, up £2.9% on average.
  • Summer 20 and winter 20 peak power increased 2.2% and 3.3% respectively, falling to £37.45/MWh and £50.39/MWh.
Commodity price movements

Oil and Coal

Commodity price movements Oil and Coal 13 March 2020

Carbon

Commodity price movements Carbon 13 March 2020

  • Brent crude oil fell 30.6% to average $35.52/bl as oil prices suffered the worst crash since the Gulf war in 1991.
  • Prices opened 26% lower at $35.57/bl on 9 March, reacting to the outcome of the OPEC meeting where Russia refused to agree to deeper cuts to oil supply.
  • The IEA predicted that global oil demand for 2020 could contract for the first time in over a decade.
  • Already at four-year lows, losses were extended on the news that Donald Trump took the decision to bar entrance to the US from 26 European countries in an to attempt limit coronavirus spreading.
  • API 2 coal followed oil and dropped 3.5% to average $55.39/t as price changes were in line with global market movements.
  • Reports this week indicated that the coronavirus had notably affected Japanese power demand.
  • EU ETS carbon prices also followed oil and lost 2.3% to average €23.18/t this week as less oil consumption has seen a drop in demand for ETS certificates.
Wholesale price snapshot

Wholesale price snapshot 13 March 2020

Posted by TEAM on 13 March 2020
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