Energy Wholesale Market Review, 15 May 2020

Headlines

Mixed movements were observed in GB wholesale gas and power markets this week; near-term contracts continued to decline on low consumption forecasts amid the coronavirus, while several further reaching contracts followed global commodities higher, with some analysts predicting a quicker bounce-back in demand than was previously expected. Day-ahead gas fell 14.3% to 12.85p/th as a result of milder weather forecast for next week. Day-ahead power fell 15.7% to £21.70/MWh, weighed on by its gas counterpart and mild weather. June 20 gas was down 12.2% at 12.64p/th and July 20 gas decreased 15.2% to 12.98p/th. In contrast, all seasonal gas contracts boosted this week, up by 1.6% on average. Winter 20 and summer 21 gas increased 0.3% and 1.9% respectively, lifting to 32.63p/th and 29.65p/th. Most seasonal power contracts boosted this week, up on average by 1.5%. Winter 20 and summer 21 expanded 1.2% and 1.8% respectively, rising to £41.65/MWh and £36.86/MWh. Brent crude oil prices rose 2.5% this week to average $30.26/bl with relatively little movements seen, though indicators towards the end of the week saw a rise in prices on 15 May. EU ETS carbon prices fell a further 2.1% to average €18.79/t, despite prices rising to €19.19/t on 15 May on colder weather and lower renewables output in Europe.

Baseload electricity
  • Day-ahead power fell 15.7% to £21.70/MWh on lower consumption forecasts for next week with milder weather expected.
  • June 20 power slipped 2.1% to £25.30/MWh and July 20 power decreased 5.1% to £25.85/MWh.
  • Q320 power moved 3.8% lower to £28.04/MWh
  • The Annual October 20 contract rose 1.5% to £39.26/MWh, but was 23.6% lower than the same time last year (£51.39/MWh).

Forward curve comparison

Baseload electricity Forward curve comparison 15 May 2020

Annual October Contract

Baseload electricity Annual October contract 15 May 2020

Peak electricity
  • Day-ahead peak power was down 11.2% to £23.75/MWh, following its baseload counterpart lower.
  • June 20 peak power declined 2.1% to £28.30/MWh, and July 20 peak power decreased 4.6% to £29.28/MWh.
  • The annual October 20 peak power lost 0.5% to 44.10/MWh.
  • This is 23.5% lower than the same time last year (57.61/MWh).

Forward curve comparison

Peak electricity Forward curve comparison 15 May 2020

Annual October contract

Peak electricity Annual October contract 15 May 2020

Seasonal power prices

Seasonal baseload power contracts

Seasonal power prices Seasonal baseload power contracts 11 May 2020

Seasonal baseload power curve

Seasonal power prices Seasonal baseload power curve 15 May 2020

  • Most seasonal power contracts boosted this week, up on average by 1.5%.
  • Winter 20 and summer 21 power expanded 1.2% and 1.8% respectively, rising to £41.65/MWh and £36.86/MWh.
  • Most seasonal peak power contracts opposed their baseload counterparts and declined this week, down 0.3% on average.
  • Winter 20 and summer 21 peak power dropped 0.3% and 0.7% respectively, falling to £47.73/MWh and £40.47/MWh.
Commodity price movements

Oil and Coal

Commodity price movements Oil and Coal 15 May 2020

Carbon

  • Brent crude oil prices rose 2.5% to average $30.26/bl as relatively minimal movements were seen throughout this week compared to recent times.
  • Prices were supported midweek by reports from the IEA showing an unexpected drop in US crude inventories, the first such drop for 15 weeks.
  • News that oil storage levels fell by 0.7mn barrels helped a 3% rise in Brent crude oil prices.
  • Further indicators towards the end of the week that demand could slowly be resurging helped prices lift back over $32/bl.
  • Particularly influential in price movements was data from China, showing that refineries had increased operations in April.
  • Further support was lent to Brent on the supply side, with Saudi Arabia committing to deeper cuts.
  • EU ETS carbon prices fell a further 2.1% to average €18.79/t, despite prices rising to €19.19/t on 15 May on colder weather and lower renewables output in Europe.
  • API 2 prices rose slightly to $53.12/t as coal prices continued to show minimal movements but could start to lift higher on increasing Chinese imports.
Wholesale price snapshot

Wholesale price snapshot 15 May 2020

Posted by TEAM on 15 May 2020
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