Energy Wholesale Market Review, 20 September 2021

Headlines

The bullish and unprecedented highs observed across wholesale markets continued again this week, with record highs seen across gas and power day-ahead markets. Day-ahead gas rose 15.7% to 160.50p/th, reaching an all-time high on 15 September at 187.50p/th, driven by higher gas-for-power demand and a backdrop of tighter gas markets with continuing maintenance works across the Norwegian Continentel Shelf, and low European gas storage volumes. Day-ahead power shared strong bullish trends seen in gas contracts, rising 93.0% to £330/MWh, also reaching an all-time high of £540/MWh on 13 September, driven by the continuation of low wind output across the week and tight system margins. October 21 gas was up 14.6% at 161.55p/th, and November 21 gas increased 14.4% to 166.50p/th. All seasonal gas contracts boosted this week, up by 5.1% on average, while both winter 21 and summer 22 gas increased 14.4% and 4.0% respectively, lifting to 164.58p/th and 82.76p/th. All seasonal power contracts boosted this week, up on average by 6.2%, as winter 21 and summer 22 climbed 19.6% and 4.7%, rising to £165.00/MWh and £90.00/MWh respectively.

Baseload electricity
  • Day-ahead power rose 93.0% to £330/MWh, following the continuation of lower wind output in the week and simultaneous tighter system margins.
  • October 21 power climbed 23.1% at £165/MWh and November 21 power increased 21.0% to £173/MWh.
  • Q421 power moved 21.8% higher to £169.9/MWh.
  • The annual October 21 contract rose 13.8% to £127.5/MWh, 166.5% higher than the same time last year (£47.85/MWh).
Forward Curve Comparison

 

Annual October Contract

Peak electricity
  • Day-ahead peak power was up 94.6% to £395.00/MWh, following its baseload counterpart higher.
  • October 21 peak power gained 61.3% at £225/MWh, and November 21 peak power increased 19.3% to £197.09/MWh.
  • The annual October 21 peak power rose 12.4% to £145.5/MWh.
  • This is 169.6% higher than the same time last year (53.97/MWh).

Forward curve comparison

 

Annual October contract

 

Seasonal power prices

Seasonal baseload power contracts

 

Seasonal baseload power curve

 

  • All seasonal power contracts boosted this week, up on average by 6.2%.
  • Winter 21 and summer 22 climbed 19.6% and 4.7% respectively, rising to £165.00/MWh and £90.00/MWh.
  • All seasonal peak power contracts rose this week, up 8.8% on average.
  • Winter 21 and summer 22 peak power increased 18.0% and 3.1% respectively, rising to £190.00/MWh and £100.99/MWh.
Commodity price movements

Oil and Coal

 

Carbon

  • Brent crude prices rebounded 3.3% to $74.51/bl this week, maintaining a strong price point in comparison to a year prior. Prices are now over 80% higher than the same time a year ago.
  • It was a largely bullish week for the Brent crude market, with minimal downside.
  • Prices gained support from multiple drivers, the first of which was lowering US crude stock volumes in the US, supporting a tighter supply picture.
  • The UK ETS fell 0.1% to average £53.70/t this week. The EU ETS also saw losses, down 3.4% to average €60.31/t.
  • The return of higher auction volumes as we progress through September has seen prices begin to retreat slightly this week.
  • Stronger wind generation expected will ease the demand for fossil fuel generation, dampening prices as a result.
Wholesale price snapshot 

 

Posted by TEAM on 20 September 2021
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