Energy Wholesale Market Review, 19 June 2020

Headlines

Most power and gas contracts rose this week, as the UK government moved the coronavirus alert level down from four to three. Day-ahead gas rose 3.6% to 14.25p/th following a rise in gas consumption throughout the week. Day-ahead power fell 0.8% to £29.25/MWh, though higher wind generation early next week will add weight to the contract. July 20 gas was up 2.1% at 14.35p/th and August 20 gas decreased 0.3% to 14.67p/th. All seasonal gas contracts went up last week, rising 4.0% on average. Both winter 20 and summer 21 gas increased 4.5% and 5.3% respectively, lifting to 32.45p/th and 30.3p/th. All seasonal power contracts saw growth this week, up on average by 3.9%. Winter 20 and summer 21 expanded 3.9% and 4.8% respectively, rising to £44.17/MWh and £39.63/MWh. Brent crude oil prices inched up 0.4% this week to average $40.62/bl. Following a drop in prices towards the end of the previous week. Brent prices rose more than 10% throughout this week to finish close to $43/bl. Despite slipping to near $38/bl at the start of the week on the news of potential further coronavirus outbreaks, the markets shrugged this news off on reports of greater compliance by OPEC+ allies in cutting their oil production. EU ETS carbon rose to more than a three-month high of €24.40/t on 19 June.

Baseload electricity
  • Day-ahead power fell 0.8% to £29.25/MWh despite higher demand this week as a result of easing lockdown restrictions.
  • July 20 power climbed 11.0% at £31.34/MWh and August 20 power increased 4.7% to £30.47/MWh.
  • Q320 power moved 6.8% higher to £31.5/MWh.
  • The Annual October 20 contract rose 4.3% to £41.9/MWh, 17.8% lower than the same time last year (£51/MWh).

Forward curve comparison

Baseload electricity Forward curve comparison 19 June 2020

Annual October Contract

Baseload electricity Annual October contract 19 June 2020

Peak electricity
  • Day-ahead peak power was down 3.2% to £30.00/MWh, following its baseload contract lower.
  • July 20 peak power gained 6.0% at £33.03/MWh, and August 20 peak power increased 5.0% to £33.34/MWh.
  • The annual October 20 peak power lost 3.2% to £47.19/MWh.
  • This is 19.4% lower than the same time last year (58.53/MWh).

Forward curve comparison

Peak electricity Forward curve comparison 19 June 2020

Annual October contract

Peak electricity Annual October contract 19 June 2020

Seasonal power prices

Seasonal baseload power contracts

Seasonal power prices Seasonal baseload power contracts 19 June 2020

Seasonal baseload power curve

Seasonal power prices Seasonal baseload power curve 19 June 2020

  • All seasonal power contracts boosted last week, up on average by 3.9%.
  • Winter 20 and summer 21 rose 3.9% and 4.8% respectively, rising to £44.17/MWh and £39.63/MWh.
  • All seasonal peak power contracts boosted this week, up 2.8% on average.
  • Winter 20 and summer 21 peak power increased 3.3% and 3.2% respectively, falling to £50.88/MWh and £43.49/MWh.
Commodity price movements

Oil and Coal

Commodity price movements Oil and coal 19 June 2020

Carbon

Commodity price movements Carbon 19 June 2020

  • Brent crude oil prices inched up 0.4% this week to average $40.62/bl.
  • Following a drop in prices towards the end of the previous week, Brent prices rose more than 10% throughout this week to finish close to $43/bl.
  • Despite slipping to near $38/bl at the start of the week on the news of potential further coronavirus outbreaks, the markets shrugged this news off on reports of greater compliance by OPEC+ allies in cutting their oil production.
  • Countries such as Kazakhstan and Iraq who had been exporting greater quantities of oil than was in line with the OPEC agreed cuts have pledged to reduce supply to make up for the overproduction.
  • The cuts begin in May and at the beginning of the month were agreed to be extended to the end of July.
  • US crude inventories continued to rise this week.
  • API 2 coal prices rose remained at $54.38/t as short-term supply issues persist in Russia.
  • Prices will continue to follow trends in demand.
  • Reports have shown that coal demand has dropped 9% this year as a result of COVID-19.
  • The rise in oil prices throughout the week supported EU ETS carbon prices, which increased by 3.1% to average €23.08/t this week.
  • Prices hit a fresh 3-month month high of €24.40/t on 19 June.
Wholesale price snapshot

Wholesale price snapshot 19 June 2020

Posted by TEAM on 22 June 2020
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