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Energy Wholesale Market Review, 15 January 2021

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This week has seen mixed pricing fundamentals for both gas and power contracts. Day-ahead gas fell 2.8% to 60.00p/th, with temperatures increasing slightly towards seasonal normal levels, as well as periods of system oversupply. Day-ahead power fell 4.2% to £65.4/MWh, despite strong gains made throughout the week with tight supply margins and low levels of wind output. Friday 15 January saw a substantial decline in the day-ahead price amid strong renewable generation and reduced demand forecasts. February 21 gas was down 1.7% at 59.78p/th, and March 21 gas decreased 4.3% to 53.25p/th. Most seasonal gas contracts declined last week, down by 2.3% on average. Summer 21 and winter 21 gas dropped 5.3% and 3.7% respectively, subsiding to 41.28p/th and 49.57p/th. All seasonal power contracts declined this week, down on average by 3.0%, as summer 21 power decreased 4.3% to £50.90/MWh, while winter 21 fell 2.6% to £57.44/MWh. Brent crude oil continued its recent bullish trends this week, lifting 4.7% from the week prior to $55.97/bl. Prices reached their highest level since the beginning of February 2020 at $56.69/bl on 13 January. EU ETS carbon remained virtually static last week, to average €33.89/t. Carbon markets continue to prosper in the news of climate targets made by the EU and the potential opportunities of the new UK ETS, with auctions set to take place no later than Q221.

Baseload electricity
Day-ahead power fell 4.2% to £65.4/MWh, following a significant price decline on Friday 15 January amid strong wind generation forecast coupled with reduced demand. February 21 power climbed 2.6% to £72.44/MWh, while March 21 power decreased 2.1% to £60.7/MWh.		Q221 power moved 4.6% lower to £51.65/MWh. The annual April 21 contract lost 3.4% to £54.17/MWh, 19.4% higher than the same time last year (£45.38/MWh).
Forward curve comparison		Annual April Contract
Peak electricity
Day-ahead peak power was down 4.8% to £71.85/MWh, following its baseload counterpart lower. February 21 peak power gained 13.7% to £92.71/MWh, and March 21 peak power increased 7.4% to £70.15/MWh.		Annual April 21 peak power lost 0.4% to £61.36/MWh. This is 18.7% lower than the same time last year (51.71/MWh).
Forward curve comparison		Annual April contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
All seasonal power contracts declined this week, down on average by 3.0%. Summer 21 power decreased 4.3% to £50.90/MWh, while winter 21 fell 2.6% to £57.44/MWh.		Most seasonal peak power contracts declined this week, down 0.6% on average. Summer 21 gas dropped 1.4% to £56.20/MWh, while winter 21 peak power increased 0.5% to £66.52/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude oil continued its recent bullish trends this week, lifting 4.7% from the week prior to $55.97/bl. Prices reached their highest level since the beginning of February 2020 at $56.69/bl on 13 January. The Brent crude price continues to benefit from further supply cut pledges from Saudi Arabia for February and March, to combat market oversupply and demand concerns as many major economies enter periods of tougher lockdown restrictions to combat the spiral in cases from Coronavirus. Towards the end of the week, news of lockdowns in China acted to generate some demand concerns in the market, with China being the largest Brent crude importer in the world. API 2 coal rose 4.6% from the previous week to average $71.16/t		EU ETS carbon remained virtually static last week, to average €33.89/t. Carbon markets continue to prosper in the news of climate targets made by the EU and the potential opportunities of the new UK ETS, with auctions set to take place no later than Q221. Colder weather has generally acted to support carbon prices, with fossil-fuel generation lifting. Pauses in auction supply also acted to support prices last week. Carbon markets will see continued support from more ambitious EU climate targets, but also from ongoing tight power supply margins observed in multiple European markets, increasing demand on fossil fuel generators.
Wholesale price snapshot