Energy Wholesale Market Review, 19 November 2021

Headlines

This week represented yet another bullish week for gas and power prices, in what continues to be a particularly volatile period for wholesale energy prices. Day-ahead gas rose 25.4% to 222.00p/th, with a combination of market drivers pushing up prices, amid news that the German regulator temporarily suspending certification for the Nordstream 2 pipeline, underpinned by an already tight gas market throughout Europe. Conversely, day-ahead power fell 8.0% to £230.00/MWh, with stronger periods of wind generation seen in the week, despite significant price rises seen on 19 November (up £44.00/MWh from 18 November). December 21 gas was up 16.0% at 225.13p/th, and January 22 gas increased 16.9% to 231.62p/th. Most seasonal gas contracts boosted this week, up by 4.0% on average, while both summer 22 and winter 22 gas increased 6.6% and 6.6% respectively, lifting to 108.75p/th and 111.37p/th. All seasonal power contracts rose this week, up on average by 5.5%, as summer 22 and winter 22 expanded 7.5% and 6.5% respectively, rising to £111.25/MWh and £113.99/MWh.

Baseload electricity
  • Day-ahead power fell 8.0% to £230.00/MWh, with weaker periods of wind generation seen in the week, despite significant price rises on Friday 19 November
  • December 21 power climbed 21.1% at £230/MWh and January 22 power increased 17.9% to £246.88/MWh.
  • Q122 power moved 18.4% higher to £225/MWh.
  • The annual April 22 contract rose 7.0% to £112.62/MWh, 149.5% higher than the same time last year (£45.13/MWh).
Forward Curve Comparison

 

Annual April Contract

Peak electricity
  • Day-ahead peak power was down 19.6% to £270.00/MWh, following baseload power lower.
  • December 21 peak power declined 0.0% at £225/MWh, and January 22 peak power decreased 0.0% to £273/MWh.
  • The annual April 22 peak power rose 2.0% to £126.5/MWh
  • This is 144.5% higher than the same time last year (51.74/MWh).

Forward curve comparison

 

Annual April contract

 

Seasonal power prices

Seasonal baseload power contracts

 

Seasonal baseload power curve

 

  • All seasonal power contracts grew this week, up on average by 5.5%.
  • Summer 22 and winter 22 expanded 7.5% and 6.5% respectively, rising to £111.25/MWh and £113.99/MWh.
  • Most seasonal peak power contracts boosted this week, up 1.2% on average.
  • Summer 22 peak power increased 7.0% to £123.00/MWh, while winter 22 peak power dropped 2.3% to £130.00/MWh.
Commodity price movements

Oil and Coal

 

Carbon

  • Brent crude prices fell 0.8% from the previous week to average $81.08/bl. Prices still remain ~84% higher than the same time a year prior.
  • Brent crude prices continue to sit well above levels seen last year, drawing on tighter global gas and oil supply.
  • Major oil producers in China and the USA are looking to exploit their crude reserves to combat the on-going market tightness, with increased supply into the market weighing on prices as a result.
  • Meanwhile, API 2 coal rose 1.4% to average $109.60/t.
  • Carbon prices saw strong gains this week, with UK ETS prices up 8.9% to £59.83/t. The EU ETS mirrored these trends, up 9.0% to €66.97/t.
  • A cold weather front making its way across much of North-West Europe and the UK has supported carbon prices, particularly as the week matured – with increased EUA demand required to cover gas-fired power generation.
  • Lower periods of wind and renewable output supported carbon prices too, with the need for increased gas-fired generation to meet demand.
Wholesale price snapshot 

 

Posted by TEAM on 19 November 2021
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