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Energy Wholesale Market Review, 18 December 2020

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The majority of power and gas contracts rose this week, in what has largely been a relatively bullish week for prices. However, some contracts reversed wider trends. Day-ahead gas represented one of the few contracts to decline this week, albeit marginally, slipping 0.1% to 42.50p/th, supported by periods of reduced temperature but ultimately offset by phases of notable system oversupply and wavering demand in parallel. Conversely, day-ahead power rose 10.5% to £49.9/MWh, supported by reduced wind generation at the start of the week coupled with increased demand. January 21 gas was up 2.5% at 45.79p/th, and February 21 gas increased 2.8% to 47.08p/th. Most seasonal gas contracts boosted this week, up by 1.1% on average, while both summer 21 and winter 21 gas increased 2.5% and 2.3% respectively, lifting to 36.80p/th and 45.38p/th. Most seasonal power contracts rose this week, up on average by 0.7%, as summer 21 and winter 21 expanded 1.7% and 1.1% respectively, rising to £47.30/MWh and £53.20/MWh. Brent crude oil climbed for the sixth consecutive week, lifting 3.3% higher to average $50.90/bl. Oil prices continued to rally on COVID-19 vaccination developments, creating a more positive demand outlook with more rapid economic recoveries predicted than previously. Oil prices also found support from reduced US crude inventories. EU ETS carbon climbed for the sixth consecutive week, rising 2.8% to average €30.86/t this week. Carbon prices are over 14% higher than the same time last month and over 20% higher than last year.

Baseload electricity
Day-ahead power rose 10.5% to £49.9/MWh, supported by reduced wind generation at the start of the week coupled with increased demand. January 21 power climbed 0.9% at £57.5/MWh and February 21 power decreased 1.1% to £58.55/MWh.		Q121 power moved 2.4% higher to £56.12/MWh. The annual April 21 contract rose 1.4% to £50.25/MWh, 4.0% higher than the same time last year (£48.31/MWh).
Forward curve comparison		Annual April Contract
Peak electricity
Day-ahead peak power was up 1.2% to £55.00/MWh, following its baseload counterpart higher. January 21 peak power gained 2.9% at £69.96/MWh, and February 21 peak power increased 3.8% to £70.21/MWh.		The annual April 21 peak power lost 2.4% to £56.13/MWh. This is 3.2% lower than the same time last year (54.38/MWh).
Forward curve comparison		Annual April contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
Most seasonal power contracts boosted this week, up on average by 0.7%. Summer 21 and winter 21 expanded 1.7% and 1.1% respectively, rising to £47.30/MWh and £53.20/MWh.		Most seasonal peak power contracts boosted this week, up 1.5% on average. Summer 21 and winter 21 peak power increased 3.0% and 1.8% respectively, falling to £51.78/MWh and £60.47/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude oil climbed for the sixth consecutive week, lifting 3.3% higher to average $50.90/bl. Oil prices continued to rally on COVID-19 vaccination developments, creating a more positive demand outlook with more rapid economic recoveries predicted than previously. The first roll-out of vaccinations to the general public has acted to ease market fears and concerns over lack of demand post-COVID. Oil prices also found support from reduced US crude inventories. Initial reports at the week’s start suggested there was a surplus in supply, but this was later counteracted with findings inventories were lower than previously understood. API 2 coal gained 5.4% from the previous week to average $67.12/t.		EU ETS carbon climbed for the sixth consecutive week, rising 2.8% to average €30.86/t this week. Carbon prices are over 14% higher than the same time last month and over 20% higher than last year. Prices predominately found support from positive sentiment on the EU’s ambitious and revised emissions targets for 2030. However, Brexit uncertainty may act to dampen further sustained rises with some ambiguity remaining on future of ETS trading with the release of the Energy White Paper from government this week. Carbon prices, like many commodity markets, continue to find support from positive COVID-19 vaccination developments.
Wholesale price snapshot