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Energy Wholesale Market Review, 22 May 2020

Headlines

Gas and power contracts saw mixed movements this week, with the price of nearer-term contracts falling as a result of continued low demand, whilst there were bullish signs for the majority of seasonal power contracts. Day-ahead gas fell 46.7% to a 14-year low of 6.85p/th as extremely low gas-for-power demand weighed on prices. Day-ahead power fell 0.9% to £21.50/MWh despite trading at £12/MWh on 21 May due to high wind generation forecasts. June 20 gas was down 32.5% at 8.53p/th, and July 20 gas decreased 32.0% to 8.82p/th. Most seasonal gas contracts declined last week, down by 1.1% on average, while both winter 20 and summer 21 gas dropped 7.8% and 3.0% respectively, subsiding to 30.10p/th and 28.77p/th. Contrastingly, the majority of seasonal power contracts rose this week, up on average by 1.2%, as winter 20 power decreased 1.5% to £41.03/MWh, while summer 21 expanded 0.6% to £37.07/MWh. Brent crude oil continued last week’s momentum to rise 15.5% last week, averaging $35.02/bl, despite falling slightly towards the end of the week. The gains made by oil prices this week have largely been attributed to the easing of lockdown restrictions across the globe resulting in a rise in demand. EU ETS carbon prices rose 8.9% this week as price gains from limited auction supply were extended by rising oil prices.

Baseload electricity
Day-ahead power fell 0.9% to £21.50/MWh, despite trading as low as £12/MWh midweek as a result of high wind generation forecasts. June 20 power slipped 4.2% at £24.25/MWh and July 20 power increased 0.6% to £26.00/MWh.		Q320 power moved 3.7% lower to £26.99/MWh. The Annual October 20 contract lost 0.5% to £39.05/MWh, 24.7% lower than the same time last year (£51.88/MWh).
Forward curve comparison		Annual October Contract
Peak electricity
Day-ahead peak power was down 9.5% to £21.50/MWh. June 20 peak power declined 1.5% to £27.87/MWh, and July 20 peak power decreased 0.2% to £29.22/MWh.		The annual October 20 peak power lost 2.8% to 45.32/MWh. This is 22.1% lower than the same time last year (58.14/MWh).
Forward curve comparison		Annual October contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
Seasonal power contracts were mixed this week, up on average by 1.2%. Winter 20 power decreased 1.5% to £41.03/MWh, while summer 21 expanded 0.6% to £37.07/MWh.		All seasonal peak power contracts boosted this week, up 3.6% on average. Winter 20 and summer 21 peak power increased 1.7% and 4.1% respectively, falling to £48.53/MWh and £42.11/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude oil continued last week’s momentum to rise 15.5% last week, averaging $35.02/bl, despite falling slightly towards the end of the week. The gains made by oil prices this week have largely been attributed to the easing of lockdown restrictions across the globe resulting in a rise in demand. Prices were also driven higher midweek by the announcement that US crude inventories had dropped for the second consecutive week, having previously recorded 15 straight weeks of rising stockpiles. Prices tailed off towards the end of the week, finishing just above $34/bl. Rising US-China tensions weighed on prices as doubts remain over the speed of demand recovery.		EU ETS carbon prices rose 8.9% this week as price gains from limited auction supply were extended by rising oil prices. Several bank holidays across the continent saw no EUA auctions from 21-25 May. API 2 coal prices slipped to $52.60/t as coal prices continued to show minimal movements.
Wholesale price snapshot