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Energy Wholesale Market Review, 13 September 2019

Headlines

All power and gas contracts and all commodity prices increased this week. Power and gas contracts reached new monthly highs driven mainly by a number of developments in Europe. News of safety concerns at a number of French nuclear reactors, leading to concerns over shutdowns to address the issues, the announcement of the closure of Europe’s largest onshore gas field eight years ahead of schedule and an ECJ ruling which will restrict the flow of Russian gas into Europe all drove power and gas prices significantly higher. Day-ahead power jumped 13.0% to £41.8/MWh, a seven-week high and month-ahead power gained 15.0% to £47.0/MWh. Significant rises were also seen in the seasonal contracts with winter 19 power gaining 9.7% to £55.5/MWh and the summer 20 contract lifting 5.8% to £49.2/MWh. Day-ahead gas surged 34.8% to a one-month high of 30.6p/th with month-ahead gas jumping 22.8% to 38.5p/th. Similar to the power market, notable gains were also observed in seasonal contracts. Winter 19 gas rose 11.9% to 50.2p/th, a one-month high and the summer 20 contract climbed 6.4% to 44.8p/th. Brent crude oil gained 3.9% to average $61.7/bl this week after Saudi Arabia named a new Energy Minister who is expected to push for greater production cuts to counter a slowdown in oil demand growth. API 2 coal prices rose 5.2% to average $67.6/t and EU ETS carbon lifted 2.8% to average €26.1/t.

Baseload electricity
Day-ahead power jumped 13.0% to £41.8/MWh, a seven-week high. Month-ahead power gained 15.0% to £47.0/MWh and November 19 power rose 10.8% to £54.7/MWh.		Q419 power climbed 11.6% to £52.9/MWh. The annual October 19 power contract increased 7.% to end the week at £52.3/MWh.
Forward curve comparison		Annual October Contract
Peak electricity
Day-ahead peak power rose 8.1% to £44.9/MWh. October 19 peak power gained 13.0% to £51.8/MWh. November 19 peak power fell 10.5% to £63.0/MWh.		Annual October 19 peak power was 7.2% higher at £57.9/MWh, £5.6/MWh above its baseload power counterpart. The contract is 1.9% above its value this time last month (£56.8/MWh), but 9.6% below the same time last year when it was £64.0/MWh.
Forward curve comparison		Annual October contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
Significant rises were also seen in the seasonal contracts with winter 19 power gaining 9.7% to £55.5/MWh and the summer 20 contract lifting 5.8% to £49.2/MWh.		Seasonal peak power contracts were 2.5% lower on average. Winter 19 peak power decreased 3.6% to £57.1/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude oil gained 3.9% to average $61.7/bl. On 12 September, OPEC announced that it agreed to reduce output by placing obligations on Iraq and Nigeria to decrease their production in line with agreed cuts. Prices were also supported by the naming Saudi Arabia’s new Energy Minister who is expected to push for greater production cuts to counter a slowdown in oil demand growth. API 2 coal prices rose 5.2% to average $67.6/t. Prices were supported by a continued decline in coal stocks in India, pointing towards increased demand in the coming weeks and months. In addition, Chinese customs data showed an 11% increase in coal imports year-to-date compared to 2018 as a result of low stocks in key ports in the north of the country.		EU ETS carbon lifted 2.8% to average €26.1/t. The main upward drivers were concerns surrounding the French nuclear fleet, the ECJ ruling on Gazprom’s use of the Opal pipeline and the announced closure of the Groningen gas field. It was also announced that the linking of the Swiss and EU ETS schemes is on track for January 2020, although there is the possibility of a delay in connecting the registers of the two schemes.
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