Energy Wholesale Market Review, 22 October 2021

Headlines

This week, all power contracts reported losses, while price movements in gas contracts were more mixed. Day-ahead gas traded 9.3% lower at 205.00p/th amid lower gas-for-power demand and system oversupply towards the end of the week. All seasonal gas contracts went up this week, rising by an average of 3.9%. Following its gas counterpart, day-ahead power reduced 9.5% to £181.00/MWh, driven by higher wind output at the start of the week but offset marginally by forecasts of lower wind output towards the week’s end. All seasonal power contracts reported losses, down by 3.1% on average. Brent crude rose 1.3% to average $85.02/bl reaching a three-year high on Monday at $86.00/bl. UK ETS carbon lowered 12.2% to £56.95/t, weighed on by higher renewables output across Europe.

Baseload electricity
  • Following its gas counterpart, day-ahead power fell 9.5% to £181.00/MWh, driven by higher wind output at the start of the week.
  • November 21 power lost 15.1% to £213.00/MWh and December 21 power slipped 15.3% to £218.00/MWh.
  • Q122 power declined 4.1% to £228.24/MWh.
  • The annual April 22 contract fell 1.6% to £113.65/MWh, 140.8% higher than the same time last year (£47.20/MWh).
Forward Curve Comparison

 

Annual April Contract

Peak electricity
  • Day-ahead peak power was down 2.4% to £205.00/MWh, following its baseload counterpart lower.
  • November 21 peak power gained 3.2% to £325.00/MWh, and December 21 peak power increased 8.0% to £289.00/MWh.
  • The annual April 22 peak power dipped 0.5% to £138.50/MWh
  • This is 161.6% higher than the same time last year (£52.95/MWh).

Forward curve comparison

 

Annual April contract

 

Seasonal power prices

Seasonal baseload power contracts

 

Seasonal baseload power curve

 

  • All seasonal power contracts reported losses, down by 3.1% on average.
  • Summer 22 and winter 22 lost 2.0% and 1.3% respectively, to £111.80/MWh and £115.50/MWh.
  • Most seasonal peak power contracts eased this week, down 0.3% on average.
  • Summer 22 peak power decreased 1.2% to £124.00/MWh, while winter 22 peak power remained at £153.00/MWh.
Commodity price movements

Oil and Coal

 

Carbon

  • Brent crude rose 1.3% to average $85.02/bl, finding support from the persisting tight global supply outlook. Brent crude also reached a fresh three-year high on Monday at $86.00/bl.
  • Prices were supported mid-week after the U.S. Energy Information Administration (EIA) reported that U.S. crude inventories fell by 400,000 barrels for the week up to October 15, meaning inventories remain below the five-year average for this time of the year.
  • The underlying tight supply outlook has still not persuaded OPEC+ to increase supply to satisfy heightened demand in the market, continuing to support higher prices.
  • Bearish price movements continued again this week, though both the UK and EU ETS remain at heightened price points by comparison to earlier this year.
  • EU ETS carbon went down 3.0% to €58.10/t, and UK ETS carbon lowered 12.2% to £56.95/t, weighed on by higher renewables output across Europe.
  • Lower prices were also as a result of trading activity earlier in the week, with prices breaching technical support levels on Tuesday, leading to traders selling EUAs as a result. However, losses were pegged back towards the end of the week, as traders sought to buy up EUAs at reduced prices
Wholesale price snapshot 

 

Posted by TEAM on 22 October 2021
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