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Energy Wholesale Market Review, 2 October 2020

Headlines

Nearly all power and gas contracts declined this week, as seasonal contracts were weighed upon by lower Brent crude oil and EU ETS carbon prices. Day-ahead power lost 6.4% to £44.00/MWh, amid high levels of wind generation for much of the week. The new month-ahead contract (November 20) dropped 4.2% to £49.95/MWh and December 20 power slipped 0.9% to £50.50/MWh. Summer 21 power moved 1.1% lower to £42.69/MWh, while winter 21 power lost 1.8% to £49.58/MWh. Day-ahead gas lifted 2.2% to 32.00p/th, with colder temperatures outweighing the impact of an oversupplied system throughout the week. November 20 gas edged 0.8% lower to 35.76p/th and December 20 gas dropped 3.8% to 38.46p/th. Summer 21 gas fell 1.6% to 32.65p/th and the winter 21 contract declined 2.1% to 41.95p/th. Brent crude oil fell 1.7% to average $41.19/bl, with the continuation of demand concerns amid a second wave of COVID-19. On Friday, prices dropped below $40.0/bl, reacting to news that President Trump had tested positive for COVID-19 and a significant increase in Libyan oil production. EU ETS lost 1.0% to average €26.63/t, pressured by increased expectations of a ‘hard Brexit’ and drops in other global markets.

Baseload electricity
Day-ahead power fell 6.4% to £44.00/MWh, amid high levels of wind generation for much of the week. November 20 dropped 4.2% to £49.95/MWh and December 20 power slipped 0.9% to £50.50/MWh.		Q121 power lost 1.7% to £51.50MWh. The annual April 21 contract slipped 1.5% to £46.14/MWh, 3.6% lower than the same time last month (£47.86/MWh), and 5.0% lower than the same time last year (£48.58/MWh).
Forward curve comparison		Annual October Contract
Peak electricity
Day-ahead peak power went down 4.8% to £49.50/MWh. November 20 peak power rose 1.7% to £64.32/MWh, and December 20 peak power lifted 0.3% to £60.95/MWh.		The annual April 21 contract remained static at £52.54/MWh. This is 4.5% lower than the same time last year (£55.00/MWh).
Forward curve comparison		Annual October contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
Seasonal power contracts declined this week, down 1.8% on average. Summer 21 power moved 1.1% lower to £42.69/MWh, while winter 21 power dropped 1.8% to £49.58/MWh.		Seasonal peak power contracts climbed 0.3% on average. Summer 21 peak power lifted 0.5% to £47.89/MWh and winter 21 peak power slipped 0.5% to £57.19/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude oil declined 1.7% to average $41.19/bl this week, with the continuation of demand growth concerns amid a second wave of COVID-19. On Friday, prices dropped below $40.0/bl, reacting to news that President Trump had tested positive for COVID-19 and a significant increase in Libyan oil production. In contrast, API 2 coal gained 1.6% to average $60.08/t.		EU ETS carbon lost 1.0% to average €26.63/t. A general sentiment of a looming ‘hard Brexit’ weighed on prices this week, as concerns continue to circulate how the structure of EU ETS carbon trading will continue to function when the UK ultimately removes itself from the European Union. Similarly, reductions in oil prices experienced this week has weighed on the carbon price.
Wholesale price snapshot