Energy Wholesale Market Review, 18 June 2021

Headlines

It was a relatively mixed week for pricing fundamentals across gas and power markets this week, with day-ahead and short-term contracts rising, whilst longer dated seasonal contracts generally retreated. Consequently, day-ahead gas rose 3.0% to 71.48p/th, following increased gas-for-power demand, driven by lower wind output in the week. Day-ahead power rose 6.9% to £81.25/MWh, generally supported by periods of low wind output throughout the week, set to continue into the following week also . July 21 gas was up 1.4% at 70.40p/th, and August 21 gas increased 1.5% to 70.45p/th. Most seasonal gas contracts declined this week, down by 1.5% on average, while winter 21 gas increased 0.1% to 77.60p/th, while summer 22 gas dropped 0.1% to 49.55p/th. Similarly, most seasonal power contracts eased on average by 1.9%, as winter 21 power decreased 1.2% to £84.50/MWh, while summer 22 fell 2.4% to £58.10/MWh. Brent crude oil gained 2.2% to average $73.57/bl this week. Prices reached a fresh two-year high of $74.40/bl on 17 June. EU ETS carbon prices fell 1.3% to average €51.88/t. Similarly, UK ETS carbon dropped 3.2% to average £45.07/t.

Baseload electricity
  • Day-ahead power rose 6.9% to £81.25/MWh, generally supported by periods of low wind output throughout the week, set to continue into the following week also.
  • July 21 power climbed 0.6% at £76.95/MWh and August 21 power decreased 0.3% to £76.9/MWh.
  • Q321 power moved 0.4% higher to £77.93/MWh.
  • The annual October 21 contract lost 1.7% to £71.3/MWh, 57.8% higher than the same time last year (£45.17/MWh).

Forward curve comparison

Baseload electricity Forward curve comparison 18 June 2021

Annual April Contract

Baseload electricity Annual October contract 18 June 2021

Peak electricity
  • Day-ahead peak power was up 11.9% to £82.49/MWh, following trends in its baseload power counterpart.
  • July 21 peak power declined 8.3% at £75.75/MWh, and August 21 peak power decreased 6.7% to £77/MWh.
  • The annual October 21 peak power lost 9.6% to £70.83/MWh.
  • This is 40.2% lower than the same time last year (50.52/MWh).

Forward curve comparison

Peak electricity Forward curve comparison 18 June 2021

Annual April contract

Peak electricity Annual October contract 18 June 2021

Seasonal power prices

Seasonal baseload power contracts

Seasonal power prices Seasonal baseload power contracts 18 June 2021

Seasonal baseload power curve

Seasonal power prices Seasonal baseload power curve 18 June 2021

  • Most seasonal power contracts declined this week, down on average by 1.9%.
  • Winter 21 power decreased 1.2% to £84.50/MWh, while summer 22 fell 2.4% to £58.10/MWh.
  • All Seasonal peak power contracts decreased this week, down 13.4% on average.
  • Winter 21 and summer 22 peak power dropped 10.1% and 8.9% respectively, falling to £83.60/MWh and £58.06/MWh.
Commodity price movements

Oil and Coal

Commodity price movements Oil and coal 18 June 2021

Carbon

Commodity price movements Carbon 18 June 2021

  • Brent crude oil gained 2.2% to average $73.57/bl, this week. Prices reached a fresh two-year high of $74.40/bl on 17 June.
  • At the week’s start, prices predominately gained support from a strong demand recovery picture, fuelling market optimism. Vaccination programmes are increasing across Europe, which are also supporting a greater demand recovery outlook.
  • Another bullish driver for Brent crude prices this week came from lowering prospects for extra oil supply from Iran, amid US sanctions being lifted looking unlikely. This had previously caused concern surrounding the potential for market oversupply.
  • EU ETS carbon prices fell 1.3% to average €51.88/t. Similarly, UK ETS carbon fell 3.2% to average £45.07/t.
  • It was a largely bearish week for carbon markets this week, across both the EU and UK ETS. Bearish signals from commodity markets weighed on prices this week, particularly at the week’s end, fuelled by climbing interest rates.
  • As the UK ETS is still in its infancy, we would expect to see some volatility since the first auctions back in mid-May. Prices will also still be weighed upon by warmer temperatures more generally on the continent.
Wholesale price snapshot 

Wholesale price snapshot 18 June 2021

Posted by TEAM on 18 June 2021
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