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Energy Wholesale Market Review, 21 August 2020

Headlines

Most power and gas contracts saw gains this week, opposing the trend seen in the previous few weeks. Day-ahead gas rose 8.1% to 20.00p/th ahead of scheduled maintenance to fields on the UKCS at the start of next week. Day-ahead power rose 10.1% to £41/MWh on lower wind generation forecasts at the start of next week. September 20 gas was up 3.1% at 21.24p/th, and October 20 gas increased 5.3% to 24.38p/th. All seasonal gas contracts rose this week, up by 0.8% on average, while winter 20 and summer 21 gas increased 3.3% and 2.7% respectively, lifting to 35.33p/th and 30.82p/th. All seasonal power contracts increased this week, up on average by 1.6%, as winter 20 and summer 21 climbed 2.1% and 2.3% respectively, rising to £47.10/MWh and £41.02/MWh. Brent crude oil prices remained unchanged averaging just over $45.04/bl this week, amid the easing of lockdown restrictions with a slow COVID-19 recovery. Prices have plateaued signalling the end to a near five-month high with some major crude oil producers seeking to limit supply.

Baseload electricity
Day-ahead power rose 10.1% to £41.00/MWh following lower wind generation forecasts at the beginning of next week. September 20 power climbed 1.1% to £36.75/MWh and October 20 power increased 2.7% to £39.04/MWh.		Q420 power moved 2.4% higher to £45.18/MWh. The annual October 20 contract rose 2.2% to £44.06/MWh, 13.2% lower than the same time last year (£50.77/MWh)
Forward curve comparison		Annual October Contract
Peak electricity
Day-ahead peak power was up 15.0% to £46.00/MWh, following its baseload counterpart higher. September 20 peak power gained 2.5% to £42.5/MWh, and October 20 peak power increased 4.8% to £46.85/MWh.		The annual October 20 peak power contract lost 2.6% to £50.56/MWh. This is 11.6% lower than the same time last year (57.2/MWh).
Forward curve comparison		Annual October contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
All seasonal power contracts rose this week, up on average by 1.6%. Winter 20 and summer 21 climbed 2.1% and 2.3% respectively, rising to £47.10/MWh and £41.02/MWh.		All seasonal peak power contracts increased this week, up 1.6% on average. Winter 20 and summer 21 peak power increased 2.8% and 2.4% respectively, rising to £55.48/MWh and £45.63/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude oil prices remained unchanged averaging just over $45.04/bl this week, amid the easing of lockdown restrictions with a slow COVID-19 recovery. Prices have plateaued signalling the end to a near five-month high with some major crude oil producers seeking to limit supply. Prices remain afflicted with fears of market oversupply and subsequently, some OPEC+ producers have held off increasing demand. Some OPEC+ members will likely need to cut output to combat recent issues of oversupply. Similarly, as issues surrounding oversupply remain consistent – OPEC+ members continue to delay resupply with India suggesting a return to higher crude demand in the short term being unlikely.		API 2 coal prices dropped 4.0% this week to average $55.21/t Reports showed that coal imports into the EU dropped for the sixteenth consecutive week. The EU ETS carbon price followed the previous week’s decline, slipping 0.8% to average €25.95/t, falling as a result of weaker demand at EUA auctions. The markets remained cautious over the number of future EUA’s in circulation at auctions. The carbon price was weighed upon by concerns on wider economy recover due to COVID-19 – whilst this week’s outage to the EU ETS registry is expected to be short lived.
Wholesale price snapshot