Home » News » Wholesale Market Review » 2 July 2021

Energy Wholesale Market Review, 2 July 2021

Headlines

Power and gas contracts continued their recent bullish run this week, with record highs observed across both day-ahead contracts. Day-ahead gas leapt 21.0% to 97.85p/th, the contracts highest price since March 2018. Near-term gas prices have been supported by high gas-for-power demand, coupled with curtailed Norwegian supplies and low gas storage levels. Longer dated gas contracts have been supported by unseasonably low gas storage levels across Europe, along with high LNG prices amid strong Asian demand. August 21 gas was up 12.3% at 88.41p/th, and September 21 gas increased 10.6% to 88.85p/th. All seasonal gas contracts boosted last week, up by 4.6% on average. These price movements fed through to the power market with the day-ahead power price up 5.1% to £92.50/MWh, rising to a four-month high in the week. EU ETS carbon rose 4.5% to average €56.48/t, reaching an all-time high on Thursday. Elsewhere, UK ETS carbon rose 2.7% to average £47.12/t, while Brent crude oil gained 0.4% to average $75.13/bl this week.

Baseload electricity
Day-ahead power rose 5.1% to £92.50/MWh, reaching a four month high on 1 July at £96.75/MWh. Prices have been driven higher by low wind output and rising gas prices. August 21 power increased 8.5% to £91.00/MWh and September 21 power went up 7.6% to £92.35/MWh.		Q4-21 power leapt 15.0% to £97.55/MWh. The annual October 21 contract lifted 5.8% to £81.08/MWh, 73.3% higher than the same time last year (£46.79/MWh).
Forward curve comparison		Annual April Contract
Peak electricity
Day-ahead peak power grew 8.2% to £102.0/MWh, following its baseload counterpart upwards. August 21 peak power rose 6.9% to £97.20/MWh, September 21 peak power lost 9.6% to £85.00/MWh.		Annual October 21 peak power went up 8.1% to £82.65/MWh. This is 56.6% higher than the same time last year (£52.77/MWh).
Forward curve comparison		Annual April contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
Seasonal power contracts gained 0.1% on average this week. Winter 21 power climbed 7.4% to £97.65/MWh, while Summer 22 power increased 3.2% to £64.50/MWh.		Seasonal peak power contracts increased 10.8% on average. Winter 21 peak power jumped 13.9% to £103.30/MWh and Summer 22 peak power eased 0.4% to £62.00/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude oil went up 0.4% to average $75.13/bl, reaching a fresh high of $75.63/bl on 2 July, its highest price since November 2018. Oil prices were guided by developments stemming from OPEC+ members meeting in the latter half of the week to discuss quotas going forward from August, along with the potential exstention of production cuts beyond April 2022. There is the potential for a modest increase in production between August and December 2021 indicating the views of OPEC+ members that global demand could uptick in the coming months.		EU ETS carbon rose 4.5% to average €56.48/t, reaching an all-time high on Thursday. Elsewhere, UK ETS carbon rose 2.7% to average £47.12/t. Carbon prices continue to be influenced by rising gas prices throughout the week. Additional support was found from leaked information from the European Commission, concerning proposed reforms to the EU ETS. EU ETS gains were pegged back by the UK ETS’s fortnightly auction, coupled with higher auction supply.
Wholesale price snapshot