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Energy Wholesale Market Review, 14 February 2022

Headlines

All gas contracts moved lower this week, with the majority of power contracts following suit. Day-ahead gas lost 5.7% to 177.20p/th, amid strong flows from Norway and forecasts of lower gas-for-power demand early next week. March 22 gas dropped 8.0% to 180.46p/th, while the April 22 contract fell 7.7% to 179.82p/th. Further along the curve, summer 22 gas decreased 8.0% to 179.31p/th and winter 22 gas declined 7.2% to 187.31p/th. Day-ahead power dropped 6.3% to £157.50/MWh, weighed on by lower gas prices and forecasts of strong wind generation on Monday. Month-ahead power fell 6.8% to £170.00/MWh and April 22 power lost 6.9% to £175.00/MWh. Meanwhile, summer 22 power slipped 6.4% to £172.00/MWh and the winter 22 contract decreased 7.2% to £181.00/MWh. All tracked international commodity prices increased this week. Brent crude oil lifted 1.4% to average $91.31/bl, supported by a surprise drawdown in US crude stocks and reports of a tight global market.

Baseload electricity
Day-ahead power fell 6.3% to £157.50/MWh, weighed on by lower gas prices and forecasts of strong wind generation for early next week. March 22 power slipped 6.8% to £170.00/MWh and April 22 power decreased 6.9% to £175.00/MWh.		Q2-22 power moved 6.8% lower to £172.00/MWh. The annual April 22 contract lost 6.8% to £176.50/MWh, but was 232.7% higher than the same time last year (£53.05/MWh).
Forward Curve Comparison		Annual April Contract
Peak electricity
Day-ahead peak power eased 5.6% to £168.00/MWh, amid a more comfortable supply-demand balance, coupled with easing baseload prices. March 22 peak power rose 2.6% to £200.00/MWh, and April 22 peak power increased 5.4% to £195.00/MWh.		The annual April 22 peak power contract declined 13.0% to £181.75/MWh. This was 206.2% higher than the same period last year (£59.36/MWh).
Forward curve comparison		Annual April contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
Most seasonal power contracts experienced losses this week, declining on average by 2.1%. Summer 22 power fell 6.4% to £172.00/MWh and the winter 22 contract lost 7.2% to £181.00/MWh.		The majority of seasonal peak power contracts also moved lower this week, down 10.8% on average. Summer 22 and winter 22 peak power decreased 5.4% and 19.7% respectively, falling to £184.50/MWh and £179.00/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude oil lifted 1.4% to average $91.31/bl, supported by a surprise drawdown in US crude stocks and reports of a tight global market. A tight global supply picture, highlighted by the IEA on Friday, continues to be exacerbated by geopolitical tensions between Ukraine and Russia, with the threat of supply disruption if tensions escalate into conflict. The IEA also noted that OPEC+ missed its output targets in January, lending additional support to prices.		EU ETS carbon gained 2.8% to average €94.21/t, while UK ETS edged 0.7% higher to average £85.48/t. Both schemes reached fresh record highs last week; the EU ETS rose to €97.61/t on Tuesday, and the UK ETS responded the following day to rise to an all-time high of £87.75/t. Prices found support from news that EDF had again revised down their 2022 forecast for French nuclear output amid ongoing maintenance issues. EU ETS prices remained bullish amid strong auction demand, after cancellation of the previous week’s auction.
Wholesale price snapshot