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Energy Wholesale Market Review, 17 April 2020

Headlines

Most power and gas contracts fell this week, though some small gains were seen in longer term power contracts. Day-ahead gas fell 12.0% to 13.60p/th on slightly milder temperatures forecast for next week, with oversupply of gas in the market continuing to rise. Day-ahead power fell 21.5% to £22.25/MWh, despite forecasts of lower wind early next week as the general decline in demand continued. May 20 gas was down 8.1% at 15.35p/th, and June 20 gas decreased 7.6% to 16.20p/th. All seasonal gas contracts declined this week, down by 0.7% on average, while both winter 20 and summer 21 gas dropped 0.1% and 0.5% respectively, subsiding to 33.70p/th and 30.55p/th. Seasonal power contracts were mixed, but moved down on average by 0.3%, as winter 20 power expanded 0.8% to £41.75/MWh, while summer 21 fell 1.6% to £37.20/MWh. Despite optimism early in the week that measures taken by OPEC and OPEC+ to cut global oil supply by 9.7mn bpd would support prices, Brent crude oil prices lost 12.2% to average $29.11/bl this week. There was sentiment in the market that the cuts to crude production would not be enough to outweigh falling demand for the commodity, currently decimated by the coronavirus. EU ETS carbon prices followed oil prices lower again, dropping 1.3% to average €20.11/t. Prices continue to follow oil and are also dependent on lockdown measures in EU countries. API 2 coal lost 1.4% to average $54.73/t this week.

Baseload electricity
Day-ahead power fell 21.5% to £22.25/MWh, despite forecasts of lower wind early next week as the general decline in demand continued. May 20 power slipped 1.9% at £26.10/MWh and June 20 power decreased 0.4% to £28.00/MWh.		Q320 power remained at £31.00/MWh. The Annual October 20 contract lost 0.4% to £39.48/MWh, 26.4% lower than the same time last year (£53.61/MWh).
Forward curve comparison		Annual October Contract
Peak electricity
Day-ahead peak power was down 14.3% to £24.00/MWh as peak hours have seen a significant drop in demand. May 20 peak power declined 5.7% at £27.70/MWh, and June 20 peak power decreased 4.1% to £30.00/MWh.		The Annual October 20 peak power lost 4.6% to £42.90/MWh. This is 28.0% lower than the same time last year (£59.56/MWh).
Forward curve comparison		Annual October contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
Seasonal power contracts were mixed last week but moved down on average by 0.3%. Winter 20 power expanded 0.8% to £41.75/MWh, while summer 21 fell 1.6% to £37.20/MWh.		Most seasonal peak power contracts declined this week, down 3.4% on average. Winter 20 and summer 21 peak power dropped 2.9% and 6.5% respectively, falling to £46.40/MWh and £39.40/MWh.
Commodity price movements
Oil and Coal		Carbon
Despite optimism early in the week that measures taken by OPEC and OPEC+ to cut global oil supply by 9.7mn bpd would support prices, Brent crude oil prices lost 12.2% to average $29.11/bl this week. There was sentiment in the market that the artificial cuts to crude production would not be enough to outweigh falling demand for the commodity, currently decimated by the coronavirus. News that the Chinese economy had suffered the worst quarterly economic contraction on record helped to push prices further down on Friday, though this was offset somewhat by the news that the US could soon ease lockdown restrictions.		API 2 coal saw small losses last week, falling 1.4% to average $54.73/t, following other global commodity markets lower. Higher demand for electricity in Germany and France last week coupled with a drop in nuclear generation helped to support prices. EU ETS carbon prices followed oil prices lower again last week, dropping 1.3% to average €20.11/t. Prices continue to follow oil and are dependent on lockdown measures in EU countries. Prices did find some uplift on the news that EDF will close some nuclear power stations in Europe.
Wholesale price snapshot