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Energy Wholesale Market Review, 17 May 2019

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Near-term power and gas contracts decreased this week, amid warmer temperatures and an oversupplied gas system. Seasonal contracts diverged with gas prices following oil prices higher, while power prices were pressured by falling EU ETS carbon prices. Most baseload power contracts decreased this week, with near-term contracts mirroring their gas counterparts and seasonal contracts pressured by lower commodity prices. Day-ahead power fell 12.6% to £40.9/MWh. The June 2019 contract slipped 4.8% to £41.4/MWh and July 19 power lost 5.0% to £41.5/MWh. Nearly all seasonal power contracts moved lower, losing 0.2% on average. Winter 19 power dropped 1.0% to £57.8/MWh and summer 20 power decreased 1.2% to £48.5/MWh. Gas contracts experienced mixed movements this week. All near-term contracts posted significant losses, whilst the majority of seasonal contracts increased. Day-ahead gas dropped 18.3% to 30.5p/th, as lower demand amid warmer temperatures contributed to an oversupplied system. Month-ahead gas fell 7.6% to 30.8p/th and July 19 gas lost 8.3% to 31.3p/th. Seasonal contracts increased 1.1% on average. However, the winter 19 contract slipped 0.5% to 54.6p/th. Brent crude oil prices reversed last week’s losses, gaining 2.0% to average $71.7/bl. Prices were supported by increased concerns of potential conflict and supply disruptions in the Middle East, following a number of incidents in the region. EU ETS carbon prices dropped 2.8% to average €25.7/t.

Baseload electricity
Day-ahead power fell 12.6% to £40.9/MWh. The June 2019 contract slipped 4.8% to £41.4/MWh and July 19 power lost 5.0% to £41.5/MWh.		Annual October 19 power declined 1.1% week-on-week to £53.2/MWh. The contract is 4.6% lower than the same time last month (£55.7/MWh).
Forward curve comparison		Annual April Contract

Peak electricity
Day-ahead peak power dropped 11.7% to £43.3/MWh, £2.4/MWh above its baseload counterpart. Day-ahead peak power is 6.5% lower than the same time last year when it was £46.3/MWh. June and July 19 peak power lost 4.1% and 4.6% to £45.5/MWh and £45.8/MWh, respectively.		Annual October 19 peak power slipped 0.7% to end the week at £59.1/MWh, £5.9/MWh above its baseload power counterpart. The contract is 3.6% below its value this time last month (£61.3/MWh), and 2.6% above the same time last year when it was £57.6/MWh.
Forward curve comparison		Annual April contract

Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
Seasonal power contracts lost 0.2% on average. Winter 19 power dropped 1.0% to £57.8/MWh. Summer 20 power fell 1.2% to £48.5/MWh.		Seasonal peak power contracts dropped 0.3% on average, with winter 19 peak power losing 0.7% to £65.0/MWh. On average, seasonal peak power contracts are 3.4% lower month-on-month.

Commodity price movements
Oil and Coal		Carbon
Brent crude oil prices reversed last week’s losses, gaining 2.0% to average $71.7/bl. Prices were supported by increased concerns of potential conflict and supply disruption in the Middle East, following a number of incidents in the region. On Sunday 12 May, four oil tankers were attacked near the Strait of Hormuz, while oil installations in Saudi Arabia were targeted by drone attacks on Tuesday. API 2 coal prices lost 0.3% to average $70.2/t. Coal prices continued to be pressured by low gas prices and high coal stocks in Europe.		EU ETS carbon prices dropped 2.8% to average €25.7/t. Carbon prices were pushed lower by decreasing coal demand and weak auction results towards the end of the week. Prices were pressured further after RWE, Europe’s largest buyer of carbon, announced an improved carbon hedging position compared to the same time last year.

Wholesale price snapshot