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Energy Wholesale Market Review, 16 November 2018

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All wholesale power and gas prices rose this week on the back of forecasts of below seasonal normal temperatures for the rest of 2018, whilst Brent crude oil and API 2 coal experienced downwards movements. The day-ahead power contract went up 14.7% to an eight-week high of £70.3/MWh, supported by falling levels of wind generation, projections of colder weather and higher gas prices. This is despite an increase in nuclear capacity supporting supply margins during periods of lower wind generation. Seasonal power contracts increased 2.5% on average. Summer and winter 19 went up 4.7% and 3.0% to £58.2/MWh and £63.7/MWh respectively. All gas contracts rose this week. Day-ahead gas gained 11.4% to end the week at an eight-week high of 70.0p/th. Prices were supported by falling temperature forecasts and an unplanned outage at Kollsnes gas terminal, despite the gas system being oversupplied across the week amid high LNG send-out. The weekly average Brent crude oil price fell for a sixth week, dropping 5.8% to average $67.9/bl. Oil prices dropped to a six-month low of $64.8/bl on 13 November, as recent concerns of a tight market have turned to worries of oversupply in 2019. API 2 coal prices dropped 2.8% to average $87.5/t, and hit a 16-week low of $86.0/t on 15 November as Chinese demand continues to drop. EU ETS carbon prices went up 7.9% to average €19.6/t. Prices broke €20.0/t at the start of the week, with support from reduced EUA auction volumes following the postponement of German auctions until Q119.

Baseload electricity
Day-ahead power rose 14.7% to an eight-week high of £70.3/MWh, following gas prices higher. December 18 and January 19 power rose 9.7% and 7.7% to £69.8/MWh and £70.0/MWh respectively.		Annual April 19 power gained 3.8% to £60.9/MWh. The contract is 0.8% above the same time last month when it was £60.4/MWh, and 36.8% than during the same period last year (£44.5/MWh).
Forward curve comparison		Annual October Contract

Peak electricity
Day-ahead peak power gained 11.3% week-on-week to £73.0/MWh. This was £3.0/MWh above its baseload counterpart. Month-ahead peak power went up 9.7% to end the week at £77.1/MWh, £7.3/MWh above its baseload counterpart.		Week-on-week, annual April 19 peak power went up 3.3% to £66.6/MWh. The contract was £5.7/MWh above its baseload power counterpart. The contract was 0.7% above its price last month (£66.1/MWh) and 32.1% higher than its value last year (£50.4/MWh).
Forward curve comparison		Annual October Contract

Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
Seasonal baseload power contracts increased 2.5% on average. Summer and winter 19 power went up 4.7% and 3.0% to £58.2/MWh and £63.7/MWh respectively.		All seasonal peak power contracts increased this week, up 2.3% on average. Prices followed their gas counterparts, with seasonal gas contracts 2.4% higher on average.

Commodity price movements
Oil and Coal		Carbon
The weekly average Brent crude oil price fell for a sixth week, dropping 5.8% to average $67.9/bl, down from $72.1/bl the previous week. Within-day oil prices dropped to an eight-month low of $64.8/bl on 13 November, amid concern of an oversupplied market in 2019. Brent crude oil prices plummeted following concerns of oversupply as US crude production is at a record high of 11.6mn bpd and US crude stocks hit 442.1mn barrels. API 2 coal prices dropped 2.8% to average $87.8/t, down from $90.3/t the previous week. Prices fell to a 16-week low of $86.0/t on 15 November, as China stop all seaborne thermal coal imports for the remainder of the year.		EU ETS carbon prices continued to recover, up 7.9% to average €19.6/t. Prices have recovered with the upcoming Market Stability Reserve that will remove surplus allowances from January 2019. The cancellation of German auctions reducing EUA volumes. Prices could also find support from below seasonal normal temperatures across Europe in the coming weeks, which may increase coal fired-power generation and push up demand for EUAs.

Wholesale price snapshot