Energy Wholesale Market Review, 20 March 2020

Headlines

Most power and gas contracts fell this week on declining demand and above seasonal normal temperatures. Day-ahead gas fell 5.4% to 24.60p/th despite a general undersupplied system this week on lowered LNG send-out. Day-ahead power fell 15.8% to £30.75/MWh, despite rising to above £37.00/MWh midweek, with highly fluctuating wind generation the driver behind such changes. April 20 gas was down 7.1% at 22.98p/th, and May 20 gas decreased 9.2% to 22.28p/th. All seasonal gas contracts declined last week, down by 4.1% on average, while both summer 20 and winter 20 gas dropped 7.7% and 4.2% respectively, subsiding to 23.14p/th and 34.26p/th. All seasonal power contracts declined this week, down on average by 6.9%, as summer 20 power decreased 10.6% to £31.36/MWh, while winter 20 fell 7.6% to £40.25/MWh. Brent crude oil fell 17.9% to average $29.17/bl as oil prices dropped to their lowest levels seen for 17 years of $26.33/bl on 19 March as the price dispute between Russia and Saudi Arabia continues. EU ETS carbon slipped by 24.4% to €17.53/t as demand for allowances dropped due amid the coronavirus outbreak. API 2 coal climbed by 0.3% to $55.67/t as demand in China begins to rise again.

Baseload electricity
  • Day-ahead power fell 15.8% to £30.75/MWh, following forecasts of a significant rise in wind generation next week.
  • April 20 power slipped 8.2% at £32.00/MWh and May 20 power decreased 9.6% to £31.65/MWh.
  • Q220 power moved 11.2% lower to £31.10/MWh.
  • The Annual April 20 contract lost 8.9% to £35.81/MWh, 26.5% lower than the same time last year (£48.73/MWh).

Forward curve comparison

Baseload electricity Forward curve comparison 20 March 2020

Annual October Contract

Baseload electricity Annual April contract 20 March 2020

Peak electricity
  • Day-ahead peak power was also down 12.6% to £33.50/MWh.
  • April 20 peak power Declined 7.7% at £33.81/MWh, and May 20 peak power decreased 9.0% to £34.20/MWh.
  • The Annual April 20 peak power lost 7.4% to 40.84/MWh.
  • This is 25.5% lower than the same time last year (54.82/MWh).

Forward curve comparison

Peak electricity Forward curve comparison 20 March 2020

Annual October contract

Peak electricity Annual April contract 20 March 2020

Seasonal power prices

Seasonal baseload power contracts

Seasonal power prices Seasonal baseload power contracts 20 March 2020

Seasonal baseload power curve

Seasonal power prices Seasonal baseload power curve 20 March 2020

  • All seasonal power contracts declined last week, down on average by 6.9%.
  • Summer 20 power decreased 10.6% to £31.36/MWh, while winter 20 fell 7.6% to £40.25/MWh.
  • All seasonal peak power contracts declined this week, down £6.2% on average.
  • Summer 20 and winter 20 peak power dropped 8.4% and 6.6% respectively, falling to £35.04/MWh and £46.63/MWh.
Commodity price movements

Oil and Coal

Commodity price movements Oil and Coal 20 March 2020

Carbon

Commodity price movements Coal 20 March 2020

  • Brent crude oil fell 17.9% to average $29.17/bl as oil prices dropped to their lowest levels seen for 17 years of $26.33/bl on 19 March.
  • Prices then rose above $30/bl on 20 March as the stock markets saw some late week gains.
  • Refusing to back down from their position in the face of spreading pandemic and increase global emergency, Saudi Arabia continue to flood the market with oil supply.
  • This move has caused devastation for many oil companies, resulting in pleas by US shale producers to limit domestic output in the effort to limit further price losses.
  • API 2 coal opposed oil and rose, inching up 0.3% to average $55.67/t as demand in China begins to rise.
  • This comes amid reports that the US coal mining industry has been pressing for financial stimulus in the market to support falling demand.
  • EU ETS carbon prices crashed last week, falling 24.4% to €17.53/t, hitting a 16-month low of €15.56/t on 18 March as demand faltered.
    An EEX auction was cancelled on 18 March on reflection of poor EUA auction volumes.
Wholesale price snapshot

Wholesale price snapshot 20 March 2020

Posted by TEAM on 23 March 2020
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