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Energy Wholesale Market Review, 20 September 2019

Headlines

News of constructive talks between Ukraine and Russia regarding the extension of their gas transit contract and EDF’s announcement that French nuclear reactors are not expected to be shutdown to address safety issues helped reduce gas and power supply concerns and weighed on prices. Day-ahead gas fell 21.6% to 24.0p/th, month-ahead gas lost 15.4% to 32.6p/th and winter 19 gas dropped 2.8% to 48.8p/th. Day-ahead power followed its gas counterpart downwards, down 8.5% to £38.3/MWh, October 19 power lost 9.9% to £42.4/MWh and the winter 19 contract declined 2.6% to £54.1/MWh. Brent crude oil grew 6.3% to average $65.5/bl, prices rose significantly early in the week following drone strikes on Saudi Arabian oil infrastructure which knocked out approximately 5.7mn bl/d of production, equivalent to ~5% of total global output. API 2 coal climbed 3.7% to $70.0/t, with the continuation of strong demand in India to replenish historically low coal stocks helping to push prices higher. EU ETS carbon gained 0.5% to average €26.2/t. Early in the week carbon prices followed oil prices higher, before easing in the second half of the week amid reduced concerns of French nuclear shutdowns.

Baseload electricity
Day-ahead power lost 8.5% to £38.3/MWh. Month-ahead power fell 9.9% to £42.4/MWh and November 19 power dropped 3.0% to £53.1/MWh.		Q419 power decreased 4.7% to £50.4/MWh. The annual October 19 power contract declined 0.8.% to end the week at £51.9/MWh.
Forward curve comparison		Annual October Contract
Peak electricity
Day-ahead peak power fell 8.0% to £41.3/MWh. October 19 peak power lowered 9.1% to £47.0/MWh. November 19 peak power slipped 3.2% to £61.0/MWh.		Annual October 19 peak power was 0.9% lower at £57.4/MWh, £5.5/MWh above its baseload power counterpart. The contract is 3.3% above its value this time last month (£55.5/MWh), but 12.6% below the same time last year when it was £65.6/MWh.
Forward curve comparison		Annual October contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
Seasonal power prices experienced mixed movements. Winter 19 power declined 2.6% to £54.1/MWh, while summer 20 power rose 1.1% to £49.8/MWh.		Seasonal peak power contracts were 0.1% lower on average. Winter 19 peak power decreased 2.6% to £60.5/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude oil gained 6.3% to average $65.5/bl. Prices rose significantly early in the week following drone strikes on Saudi Arabian oil infrastructure which knocked out approximately 5.7mn bl/d of production. This is equivalent to ~5% of total global output. However, prices did ease towards the end of the week after Saudi Arabia announced it would call on its oil inventories to replace lost production whilst full production would be back online by the end of September. API 2 coal prices rose 3.7% to average $70.0/t. The continuation of strong demand in India to replenish historically low coal stocks helped push prices higher. However, European demand remained weak amid an increase in renewable output on the Continent.		EU ETS carbon lifted 0.5% to average €26.2/t. Early in the week carbon prices followed oil prices higher. However, prices dropped in the second half of the week amid reduced concerns of French nuclear shutdowns and reports that Saudi Arabia will restore oil production quicker than previously expected. Developments in talks between Ukraine and Russia on their gas transit contract will have implications for carbon prices in the coming weeks. Any agreement to maintain gas flows through Ukraine will support gas-fired power generation in Europe and as such EUA demand.
Wholesale price snaphot