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Energy Wholesale Market Review, 17 December 2021

Headlines

This week saw strong bullish price movements in both gas and baseload power contracts. Day-ahead gas rose 33.3% to 340.00p/th, following rising demand and renewed concerns surrounding Russian gas deliveries via the Nord Stream 2 pipeline. Day-ahead power jumped up 68.1% to £400.00/MWh, drawing on bullish momentum seen in near-term gas contracts and exacerbated by low wind output in the week, a trend set to continue into the coming week. Front month gas contracts experienced strong gains, with January 22 gas up 30.9% at 339.67p/th, and February 22 gas increased 29.9% to 338.97p/th. Most seasonal gas contracts boosted this week, up by 10.6% on average, with summer 22 and winter 22 gas increasing 22.1% and 21.3% respectively, lifting to 198.06p/th and 201.28p/th. All seasonal baseload power contracts reported gains this week, up on average by 11.0%, as summer 22 and winter 22 expanded 18.8% and 21.3% respectively, rising to £183.00/MWh and £194.00/MWh.

Baseload electricity
Day-ahead power rose 68.1% to £400.00/MWh, following strong near-term gains in gas markets, exacerbated by low wind output during the week. January 22 power climbed 45.5% to £480.00/MWh and February 22 power rose 50.7% to £440/MWh.		Q122 power moved 43.8% higher to £405.56/MWh. The annual April 22 contract increased 20.1% to £188.50/MWh, 286.0% higher than the same time last year (£48.83/MWh), and 67.4% higher than the same time last month (£112.62/MWh).
Forward Curve Comparison		Annual April Contract
Peak electricity
Day-ahead peak power was up 75.0% at £525.00/MWh, following its baseload counterpart higher. January 22 peak power gained 61.8% to £825.00/MWh, and February 22 peak power increased 84.9% to £675.00/MWh.		This week, the annual April 22 peak power contract rose 8.8% to £200.25/MWh This is 264.0% higher than the same time last year (55.01/MWh), and 58.3% higher than the same time last month (£126.50/MWh).
Forward curve comparison		Annual April contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
All seasonal power contracts boosted this week, up on average by 11.0%. Summer 22 and winter 22 contracts went up 18.8% and 21.3% respectively, rising to £183.00/MWh and £194.00/MWh.		Despite gains in nearer-term seasonal peak power contracts, seasonal peak power contracts were down 8.7% on average this week. Summer 22 and winter 22 peak power increased 6.0% and 11.2% respectively, rising to £181.50/MWh and £219.00/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude prices fell marginally from the week prior to average $74.19/bl. This week, prices continued to be weighed on by developments related to the Covid-19 Omicron variant, with more substantial lockdown measures emerging across much of Europe and further afield. It is feared that demand could suffer as a consequence of renewed lockdown measures, and this has ultimately weighed on prices in the week. There are also reports that supply could outstrip demand next year based on current trends.		Carbon prices saw mixed movements this week, with the UK ETS rising 4.0% to average £75.29/t, whereas the EU ETS fell, down 2.7% to average €80.68/t. For UK ETS prices, news from the UK ETS authority on 14 December that they would not be intervening with the scheme despite the December trigger price being met under the Cost Containment mechanism (CCM) allowed prices to climb further into the weeks end. EU ETS prices were dented by news a sell-off in EUA futures following Wednesday’s option expiry.
Wholesale price snapshot