Energy Wholesale Market Review, 20 November 2020

Headlines

All gas contracts fell this week, reflecting a period of warmer weather experienced throughout the week, compounded by reduced demand. As a result, day-ahead gas fell 6.7% to 34.60p/th, owning to the aforementioned conditions. Similar to gas contracts, the majority of power contracts declined this week with the notable exception being the day-ahead contract which rose 20.3% to £44.5/MWh, supported by weaker renewable output during the week combined with periods of lower wind generation. December 20 gas was down 7.9% at 37.21p/th, and January 21 gas decreased 8.9% to 38.22p/th. All seasonal gas contracts declined this week, down by 4.4% on average. Summer 21 and winter 21 gas dropped 8.0% and 4.5% respectively, subsiding to 31.62p/th and 40.49p/th. All seasonal power contracts declined this week, down on average by 3.4%, as summer 21 power decreased 5.2% to £41.40/MWh, while winter 21 fell 2.6% to £48.49/MWh. Brent crude oil climbed again this week, lifting a further 2.1% from the week prior to average $44.05/bl – reaching a two-month high on 19 November with prices at $44.31/bl. Oil prices continued to gain momentum from further vaccination developments announced throughout this week and OPEC+ are looking at the potential of delaying supply increases originally proposed for January 2021. EU ETS carbon climbed a further 2.9% to average €26.23/t, this week. Like other commodity markets, carbon prices rose to a milestone high, reaching a one-month high of €27.60/t on 18 November. Carbon prices, like many global commodities markets this week, found support from the positive news of COVID-19 vaccinations.

Baseload electricity
  • Day-ahead power rose 20.3% to £44.5/MWh, following weaker renewable generation coupled with periods of reduced wind generation throughout the week.
  • December 20 power slipped 7.9% to £43.5/MWh and January 21 power decreased 9.4% to £47.9/MWh. 
  • Q121 power moved 6.8% lower to £46.5/MWh.
  • The annual April 21 contract lost 3.8% to £44.94/MWh, 6.4% lower than the same time last year (£48/MWh).

Forward curve comparison

Annual April Contract

Peak electricity
  • Day-ahead peak power was up 0.5% to £48.75/MWh, following its baseload counterpart higher.
  • December 20 peak power declined 2.7% to £51.4/MWh, and January 21 peak power decreased 3.9% to £55.21/MWh.
  • The annual April 21 peak power lost 2.3% to £50.67/MWh.
  • This is 6.4% lower than the same time last year (54.11/MWh).

Forward curve comparison

 

Annual April contract

 

Seasonal power prices

Seasonal baseload power contracts

Seasonal power prices Seasonal baseload power contracts 13 November 2020

Seasonal baseload power curve

  • All seasonal power contracts declined this week, down on average by 3.4%.
  • Summer 21 power decreased 5.2% to £41.40/MWh, while winter 21 fell 2.6% to £48.49/MWh.
  • All Seasonal peak power contracts declined this week, down 1.9% on average.
  • Summer 21 and winter 21 peak power dropped 3.4% and 1.3% respectively, falling to £45.89/MWh and £55.45/MWh.
Commodity price movements

Oil and Coal

Carbon

  • Brent crude oil climbed again this week, lifting a further 2.1% from the week prior to average $44.05/bl – reaching a two-month high on 19 November with prices at $44.31/bl.
  • Oil prices continue to gain momentum from further vaccination developments announced throughout this week.
  • Similarly, OPEC+ is looking at the potential of delaying supply increases originally proposed for January 2021, as a pre-emptive mechanism to provide further support to the Brent crude price during an important period for many global commodity markets looking to emerge from the ‘second wave’ of Coronavirus.
  • API 2 coal gained 0.9% from the previous week to average $56.25/t.
  • EU ETS carbon climbed a further 2.9% to average €26.23/t, this week. Like other commodity markets, carbon prices rose to a milestone high, reaching a one-month high of €27.60/t on 18 November.
  • Carbon prices, like many global commodities markets this week, found support from the positive news of COVID-19 vaccinations. Additionally, EUA auctions are expected to be delayed until late January 2021 at the earliest for technical reasons, offering support to prices in the near-term.
  • Carbon prices will continue to be suppressed by on-going Brexit uncertainty, partially offsetting price growth in recent weeks.
Wholesale price snapshot 

 

Posted by TEAM on 23 November 2020
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