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Energy Wholesale Market Review, 14 August 2020

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Most power and gas contracts fell this week. Day-ahead gas dropped 3.4% to 18.5p/th following general oversupply on the NTS as both the Langeled pipeline and Barrow terminal saw higher flows this week. Day-ahead power was an exception and rose 8.1% to £37.25/MWh on forecasts of lower wind generation towards the start of next week. September 20 gas was down 4.7% at 20.60p/th, and October 20 gas decreased 2.9% to 23.15p/th. All seasonal gas contracts declined last week, down by 0.7% on average. Winter 20 and summer 21 gas dropped 0.2% and 0.8% respectively, subsiding to 34.2p/th and 30p/th. All seasonal baseload power contracts declined this week, down on average by 2.0%, as winter 20 power decreased 2.0% to £46.15/MWh, while summer 21 fell 2.2% to £40.10/MWh. Brent crude oil prices rose by 1.7% to average $45.07/bl this week, continuing last week’s trend. Prices were supported mid-week by another weekly decline in US crude inventory levels. However, the decision by OPEC+ producers to ease production cuts at the start of August provided downward pressure to prices. The EU ETS price reversed the previous week’s gains, falling 1.3% to average €26.17/t, as a result of weaker demand at EUA auctions.

Baseload electricity
Day-ahead power rose 8.1% to £37.25/MWh as fluctuating wind generation saw volatility in the contract throughout the week. September 20 power slipped 6.8% to £36.35/MWh and October 20 power decreased 2.6% to £38.00/MWh.		Q420 power moved 2.0% lower to £44.10/MWh. The annual October 20 contract lost 2.1% to £43.13/MWh, 16.4% lower than the same time last year (£51.59/MWh).
Forward curve comparison		Annual October Contract
Peak electricity
Day-ahead peak power was up 3.9% to £40.00/MWh following its baseload counterpart higher. September 20 peak power declined 2.2% to £41.48/MWh, and October 20 peak power increased 3.5% to £44.7/MWh.		The annual October 20 peak power contract lost 0.2% to £49.27/MWh. This is 14.7% lower than the same time last year (57.73/MWh).
Forward curve comparison		Annual October contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
All seasonal power contracts declined last week, down on average by 2.0%. Winter 20 power decreased 2.0% to £46.15/MWh, while summer 21 fell 2.2% to £40.1/MWh.		Most seasonal peak power contracts declined this week, down 0.7% on average. Winter 20 gas increased 0.3% to £53.96/MWh, while summer 21 peak power dropped 0.7% to £44.58/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude oil prices rose by 1.7% to average $45.07/bl this week, continuing last week’s trend. Prices were weighed upon this week by rising fears of market oversupply, following the decision by OPEC+ producers to ease production cuts at the start of August. Both the IEA and OPEC this week cut their 2020 demand forecasts for oil, indicating a weakening outlook for the coming months. The Brent price was supported mid-week, with the EIA reporting another weekly decline in US crude inventory levels. The continued decline in US oil stock indicates rising consumption in the country, despite the rising number of COVID-19 cases being reported.		API 2 coal dropped 3.9% this week to average $57.54/t. Spain announced this week that an additional 1.2GW of coal generational capacity would be closed by 2022. The EU ETS price reversed the previous week’s gains, falling 1.3% to average €26.17/t, as a result of weaker demand at EUA auctions. The markets were cautious over the number of future EUA’s in circulation at auctions. With supply having been reduced so far in August, full-sized auctions are set to resume in the Autumn, which will likely weigh on prices.
Wholesale price snapshot