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Energy Wholesale Market Review, 21 June 2019

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Baseload power contracts up to and including winter 19 power were down week-on-week, whilst contracts beyond this rose. Power prices mirrored their gas counterparts as warmer temperatures are expected next week. The day-ahead contract was 3.2% lower at £38.0/MWh, a fresh two-week low. Q319 power decreased 3.1% week-on-week to £39.4/MWh. This is the first time a front-quarter baseload power contract has gone below £40.0/MWh since Q317 power in June 2017. On average, seasonal baseload power contracts were up 0.3% week-on-week, with all contracts mirroring their gas counterparts. All gas contracts up to and including winter 19 were lower week-on-week. Gas prices were pressured by forecasts of temperatures well above seasonal normal levels, and the expectation of comfortable gas supplies. Day-ahead gas was down 5.2% to end the week at 26.3p/th, the lowest since level September 2016. On average, seasonal contracts were 0.4% higher, supported by a recovery in Brent crude oil prices. Brent crude oil prices rose for a second consecutive week, up by 1.0% to average $62.4/bl. Prices were supported by growing tensions between Iran and the US, following news that Iran shot down a US military drone. API 2 coal prices slipped 1.7%, averaging $63.1/t. EU ETS carbon prices edged 0.3% higher to average €25.1/t. This was despite pressure following an increase in the number of auctions which took place compared to the previous week, boosting the supply of EUAs.

Baseload electricity
The day-ahead contract was 3.2% lower at £38.0/MWh, a fresh two-week low. Day-ahead power is 29.0% lower than the same time last year (£53.5/MWh). Month-ahead (July) power ended the week at £37.7/MWh.		Annual October 19 power rose by 0.3% week-on-week to £51.7/MWh. The contract is 2.9% lower than the same time last month (£53.3/MWh), but 4.5% higher than the same time last year (£49.5/MWh).
Forward curve comparison		Annual October Contract

Peak electricity
Day-ahead peak power fell 1.8% to £41.1/MWh, £3.1/MWh above its baseload counterpart. Day-ahead peak power is 28.4% lower than the same time last year when it was £57.4/MWh. July 19 peak power decreased 2.7% to end the week at £41.4/MWh.		Annual October 19 peak power was unchanged, remaining at £57.6/MWh, £5.9/MWh above its baseload power counterpart. The contract is 2.5% below its value this time last month (£59.1/MWh), but 4.2% above the same time last year when it was £55.3/MWh.
Forward curve comparison		Annual October contract

Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
On average, seasonal baseload power contracts were up 0.3%, mirroring their gas counterparts. Winter 19 power was slightly lower, down 0.2% at £55.4/MWh. The contract hit a near three-month low of £54.9/MWh on 19 June.		Most seasonal peak power contracts rose, gaining 0.9% on average. Winter 19 peak power slipped 0.2% to £62.5/MWh, whilst summer 20 peak power lifted 0.2% to £52.7/MWh.

Commodity price movements
Oil and Coal		Carbon
Brent crude oil prices rose for a second consecutive week, up by 1.0% to average $62.4/bl. Prices were supported by growing tensions between Iran and the US, following news that Iran shot down a US military drone. Tensions in the Middle East have resulted in a sharp rise in insurance for tankers in the region, and the addition of a risk premium to oil prices. API 2 coal prices slipped 1.7%, averaging $63.1/t. Coal prices started the week at $62.8/t, the lowest since March 2017 as demand remains low as ARA coal stocks were at 6.8mt as of 17 June. With temperatures expected to exceed 35oC in Germany this week, and forecasts of lower wind output, coal-fired generation will likely rise to meet the increase in cooling demand and will act as a bullish influence on coal prices in the weeks ahead.		EU ETS carbon prices edged 0.3% higher to average €25.1/t. This was despite pressure following an increase in the number of auctions which took place compared to the previous week, boosting the supply of EUAs. Support for carbon prices is expected in the month-ahead as forecasts of warmer weather across Europe will lead to a rise in cooling-demand, some of which will be met by thermal generation.

Wholesale price snapshot