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Energy Wholesale Market Review, 14 March 2022

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This week represented a slightly more bearish outlook overall across most gas and power contracts, despite the more macro bullish fundamentals at play, a consequence of the ensuing conflict in Ukraine at present. Day-ahead gas fell 25.3% to 295.00p/th, primarily due to much milder weather across GB this week and periods of higher wind outturn. Day-ahead power followed its gas counterpart contract lower too, falling 31.3% to £230.00/MWh, with further downward pressure on prices driven through rising wind outturn as the week matured. April 22 gas was down 25.4% at 316.50p/th, and May 22 gas decreased 21.8% to 316.05p/th. Elsehwere, most seasonal gas contracts declined this week, down by 9.4% on average, while both summer 22 and winter 22 gas dropped 22.1% and 17.1% respectively, subsiding to 314.10p/th and 294.96p/th – with the bearish movements of near-term gas contracts filtering through. Similarly, most seasonal power contracts declined this week too, down on average by 7.2%, as summer 22 power decreased 24.9% to £260.00/MWh, while winter 22 fell 18.8% to £260.00/MWh.

Baseload electricity
Day-ahead power fell 31.3% to £230.00/MWh, following bearish price movements in its gas counterpart contract and periods of higher wind output. April 22 power slipped 22.9% at £270.00/MWh and May 22 power decreased 23.1% to £267.00/MWh.		Q222 power moved 24.7% lower to £262/MWh. The annual April 22 contract lost 21.9% to £260.00/MWh, 376.3% higher than the same time last year (£54.59/MWh).
Forward Curve Comparison		Annual April Contract
Peak electricity
Day-ahead peak power was down 32.9% to £245.00/MWh, following baseload power lower. April 22 peak power gained 63.5% at £277.90/MWh, and May 22 peak power decreased 10.5% to £270.30/MWh.		The annual April 22 peak power rose 16.7% to £279.53/MWh This is 348.2% higher than the same time last year (62.37/MWh).
Forward curve comparison		Annual April contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
The majority of seasonal power contracts declined this week, falling on average by 7.2%. Summer 22 power decreased 24.9% to £260.00/MWh, while winter 22 fell 18.8% to £260.00/MWh.		Most seasonal peak power contracts saw losses, down 1.7% on average this week. Summer 22 and winter 22 peak power dropped 18.8% and 14.6% respectively, falling to £268.80/MWh and £290.25/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude prices recorded further gains this week. Subsequently, Brent crude prices averaged $121.92/bl this week, 12.6% higher than the previous week. This also included a fresh eight-year high on Wednesday 9 March at $126.80/bl. The on-going conflict between Russia and Ukraine has prompted a bullish response for Brent crude prices, primarily with the continuation of fresh sanctions imposed on Russia, with the US banning Russian oil imports this week and the UK imposing other financial sanctions. Elsewhere, large oil majors have announced their disinvestment from operations either in Russia or with Russian businesses.		Carbon markets saw a second consecutive week of decline from the week previous, with the UK ETS down 2.3% to £72.60/t with the EU ETS down 3.7% to €69.80/t. The volatility in wholesale energy prices has continued to unsettle the carbon market. Primarily, bearishness in the previous seven days has come from the continued volatile trading sessions, with financial markets in particular being swayed by the news surrounding the conflict between Ukraine and Russia. Milder weather has also suppressed EUA demand, with less emphasis placed on gas-fired plant to meet demand.
Wholesale price snapshot