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Energy Wholesale Market Review, 14 December 2018

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The majority of wholesale power and gas contracts rose week-on-week, with day-ahead power an exception as it was supported by strong wind generation whilst colder weather drove gas prices higher. Commodities experienced mixed movements, with both API 2 coal and EU ETS carbon prices rising week-on-week, compared to Brent crude oil which dropped despite upcoming cuts. Day-ahead power fell 0.9% to end the week at £64.1/MWh, whilst the month-ahead contract increased 8.7% to £67.4/MWh and February 19 power gained 7.6% to £67.0/MWh. Most seasonal baseload power contracts increased, up 4.0% on average. All gas contracts increased, with near-term contracts pressured by below seasonal normal temperatures last week, despite high LNG send-out continuing. Week-on-week day-ahead gas gained 10.2% to 66.4p/th. The new month-ahead contract rose 8.8% to 67.9p/th and seasonal gas contracts went up 5.0% on average. Brent crude oil prices decreased 1.1% to average $60.6/bl last week, reversing the previous week’s gains. Prices were weighed on by the release of data showing Chinese economic growth had slowed to the lowest in years despite news that US crude stocks had decreased by 7.3mn barrels the previous week. API 2 coal prices gained 2.1% to average $88.1/t, despite China reducing seaborne thermal coal imports for the remainder of 2018. EU ETS carbon prices lifted 6.3% to average €21.3/t, with within-day carbon prices peaking at €23.8/t on 14 December, a three-month high.

Baseload electricity
Day-ahead power fell 0.9% to end the week at £64.1/MWh amid forecasts of high wind generation. January 19 power increased 8.7% to £67.4/MWh and February 19 power gained 7.6% to £67.0/MWh.		Annual April 19 power climbed 6.1% to £61.8/MWh. The contract is 1.5% above the same time last month when it was £60.9/MWh.
Forward curve comparison		Annual April Contract

Peak electricity
Day-ahead peak power slipped 3.8% week-on-week to £70.5/MWh. This was £6.4/MWh above its baseload counterpart. Month-ahead peak power went up 7.0% to end the week at £74.6/MWh, £7.2/MWh above its baseload counterpart.		Week-on-week, annual April 19 peak power went up 5.4% to £67.3/MWh. The contract was £5.5/MWh above its baseload power counterpart. The contract was 1.0% above its price last month (£66.6/MWh) and 61.1% higher than its value last year (£49.4/MWh).
Forward curve comparison		Annual April Contract

Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
Most seasonal baseload power contracts increased week-on-week, up 4.0% on average. Both summer and winter 20 went up 4.5% to £53.5/MWh and £59.2/MWh respectively. Summer 21 power slipped 1.5% to £47.6/MWh.		All seasonal peak power contracts went up this week, rising 5.2% on average. Prices followed their gas counterparts, with seasonal gas contracts 5.0% higher on average.

Commodity price movements
Oil and Coal		Carbon
A Brent crude oil prices decreased 1.1% to average $60.6/bl, reversing the previous week’s gains. Prices were weighed on by the release of data showing Chinese economic growth had slowed to the lowest in years as retail sales were at a 15-year low. This was despite news that US crude stocks had decreased by 7.3mn barrels the previous week according to the US Energy Information Agency, slightly lower than the American Petroleum Institute’s reported 10.2mn barrels. API 2 coal prices gained 2.1% to average $88.1/t. Coal prices have hit a one-month high as demand in Europe rose last week amid below seasonal normal temperatures. According to customs data from South Korea, coal imports rose 17% on-year in November, hitting 11.7mn tonnes.		EU ETS carbon prices lifted 6.3% to average €21.3/t. Within-day carbon prices rose to €23.8/t on 14 December, a three-month high, with the upcoming Market Stability Reserve (MSR) starting in January 2019 reducing EUA auction volumes. Nine EU members, including the UK, France and Italy, have also pledged to co-operate in order to strengthen EU carbon prices to meet the Paris Agreement goals, citing a World Bank-backed report which called for global carbon prices of $40-$80/t (€34-€68/t) by 2020.

Wholesale price snapshot