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Energy Wholesale Market Review, 18 April 2019

Headlines

All wholesale gas contracts fell week-on-week, as the return of gas flows from Norway boosted supplies and weaker demand was expected amid forecasts of warmer weather over Easter weekend. Day-ahead gas dropped 10.6% to 35.3p/th. The contract ended the week 31.9% lower than the same time last year when it was 51.8p/th. All seasonal contracts decreased week-on-week, falling 0.8% on average, with winter 19 gas slipping 0.9% to 57.8p/th. Nearly all baseload power contracts followed their gas counterparts, with the exception of winter 20. Day-ahead power reversed the previous week’s gains, dropping 3.3% to end the week at £44.3/MWh. Seasonal power contracts fell 0.6% on average. The winter 19 power contract fell 0.6% at £60.4/MWh, but was up 13.0% from the same time last month (£45.2/MWh). Baseload power contracts fell despite further recovery in EU ETS carbon prices, which rose to a near 11-year high of €27.8/t, as total auction volumes halved this week from the previous week. Brent crude oil prices rose 0.9% to average $71.8/bl this week and ranged between $70.8/bl and $72.3/bl, a five-month high. Support continued to come from concerns of a tighter oil market amid OPEC+ production cuts, US sanctions on Iran and Venezuela, and unrest in Libya. API 2 coal prices averaged $74.8/t this week, unchanged from the previous week. Coal prices started the week at $76.0/t but dropped as low as $73.8/t on 16 April as low gas prices in Europe continued to drive coal-fired power plants out of the generation mix.

Baseload electricity
Day-ahead power reversed the previous week’s gains, down 3.3% to end the week at £44.3/MWh. The month-ahead contract fell 3.1% to £44.6/MWh and June 19 power dropped 3.6% to £45.3/MWh.		Annual October 19 power slipped 0.7% week-on-week to £55.7/MWh. The contract is 13.0% above the same time last month (£49.3/MWh).
Forward curve comparison		Annual April Contract

Peak electricity
Day-ahead peak power decreased 3.6% to £46.3/MWh, £2.0/MWh above its baseload counterpart. Day-ahead peak power is 11.3% lower than the same time last year when it was £52.2/MWh. May and June 19 peak power fell 3.8% and 3.3% to £47.6/MWh and £49.8/MWh, respectively.		Annual October 19 peak power lost 0.8% to £61.3/MWh, remaining £5.6/MWh above its baseload power counterpart. The contract is 11.1% higher than its value this time last month (£55.1/MWh).
Forward curve comparison		Annual April contract

Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
Seasonal power contracts fell 0.6% on average. Winter 19 power dropped 0.6% to £60.4/MWh, up 13.0% from the same time last month when it was £53.5/MWh.		Seasonal peak power contracts fell 0.7% on average, with only winter 20 rising, up 0.2%. The winter 19 peak contract was down 0.7% at £67.3/MWh.

Commodity price movements
Oil and Coal		Carbon
Brent crude oil prices rose 0.9% to average $71.8/bl. This week, oil prices ranged between $70.8/bl and $72.3/bl, a five-month high. Support continued to come from concerns of a tighter oil market amid OPEC+ production cuts, US sanctions on Iran and Venezuela, and unrest in Libya. These factors are the key driving force in oil prices at the moment, offsetting any pressure from news that OPEC+ may halt production cuts beyond June 2019, and reports that US crude production is at a record high of 12.2mn bpd. API 2 coal prices averaged $74.8/t this week, unchanged from the previous week. Coal prices started the week at $76.0/t but dropped as low as $73.8/t on 16 April as low gas prices in Europe continued to drive coal-fired power plants out of the generation mix.		EU ETS carbon prices jumped 4.7% to average €27.1/t. Prices peaked at €27.8/t on 17 April, a near 11-year high, as total auction volumes halved this week from the previous week. No auctions took place on 17 and 19 April, with Friday 19 April marking the start of a four-day Easter weekend. Last minute compliance buying is still taking place ahead of the 30 April compliance deadline. Carbon prices have remained bullish despite cheap gas prices and relatively expensive coal prices, which would be expected to drive coal-fired power stations out of the generation mix and therefore lower demand for EUAs.

Wholesale price snapshot