Energy Wholesale Market Review, 23 July 2021

Headlines

It was a largely bullish week again for GB gas and power markets this week, building on recent upward drivers. Subsequently, day-ahead gas rose 3.1% to 90.00p/th, rebounding from losses in the week prior, driven by the continued low levels of gas in storage and reduced North Sea pipeline flows in the week . Day-ahead power rose 4.1% to £96.00/MWh, buoyed by higher gas prices and low wind output. August 21 gas was up 2.5% at 88.97p/th, and September 21 gas increased 3.1% to 90.65p/th. Most seasonal gas contracts boosted this week, up by 0.5% on average, with winter 21 and summer 22 gas rising 1.5% and 0.4% respectively, lifting to 93.60p/th and 56.00p/th. Seasonal power contracts saw similar movements, up on average by 0.1%, as winter 21 and summer 22 expanded 0.2% and 0.4% respectively, growing to £95.00/MWh and £63.00/MWh. Brent crude oil fell 4.5% to average $71.47/bl this week. A significant driving force of downward movements this week for Brent crude prices can be attributed to the outcome of recent OPEC+ discussions. The discussions concluded with members agreeing to boost production in August. It was a third consecutive week of bearish price movements across both UK and European carbon markets. The EU ETS fell 1.6% to €51.99/t, with the UK ETS falling 0.8% to £43.30/t. Whilst prices across both the UK and EU ETS dropped, prices are still high by comparison to prices earlier this year.

Baseload electricity
  • Day-ahead power rose 4.1% to £96.00/MWh, following gas price movements on the near curve and buoyed by the continuation of lower wind output in part.
  • August 21 power climbed 0.7% at £89.35/MWh and September 21 power increased 0.9% to £90.65/MWh.
  • Q421 power was unchanged at £95.75/MWh.
  • The annual October 21 contract rose 0.3% to £79/MWh, 70.6% higher than the same time last year (£46.3/MWh).

Forward curve comparison

Baseload electricity Forward curve comparison 23 July 2021

Annual April Contract

Baseload electricity Annual October contract 23 July 2021

Peak electricity
  • Day-ahead peak power was up 4.4% to £103.00/MWh, following its baseload counterpart upwards.
  • August 21 peak power gained 0.2% at £89/MWh, and September 21 peak power increased 3.8% to £97.2/MWh.
  • The annual October 21 peak power lost 3.5% to £83.5/MWh.
  • This is 59.7% lower than the same time last year (52.28/MWh).

Forward curve comparison

Peak electricity Forward curve comparison 23 July 2021

Annual April contract

Peak electricity Annual October contract 23 July 2021

Seasonal power prices

Seasonal baseload power contracts

Seasonal power prices Seasonal baseload power contracts 23 July 2021

Seasonal baseload power curve

Seasonal power prices Seasonal baseload power curve 23 July 2021

  • Most seasonal power contracts saw slight gains this week, up on average by 0.1%.
  • Winter 21 and summer 22 expanded 0.2% and 0.4% respectively, rising to £95.00/MWh and £63.00/MWh.
  • The majority of seasonal peak power contracts declined this week, down 1.7% on average.
  • Winter 21 gas increased 1.1% to £105.00/MWh, while summer 22 peak power dropped 10.4% to £62.00/MWh.
Commodity price movements

Oil and Coal

Commodity price movements Oil and coal 23 July 2021

Carbon

Commodity price movements Carbon (UK and EU ETS) 23 July 2021

  • Brent crude oil fell 4.5% to average $71.47/bl this week.
  • A combination of bearish factors contributed to the price losses in Brent crude oil across this week.
  • A significant driving force of downward movements this week for Brent crude prices can be attributed to the outcome of recent OPEC+ discussions. The discussions concluded with members agreeing to boost production in August, something which had previously been avoided to prevent market oversupply in an uncertain landscape amid on-going demand recovery concerns from coronavirus.
  • Sustained losses were capped by projections of tighter supply for the remainder of 2021.
  • It was a third consecutive week of bearish price movements across both UK and European carbon markets. The EU ETS fell 1.6% to €51.99/t, with the UK ETS falling 0.8% to £43.30/t.
  • Whilst prices across both the UK and EU ETS declined, prices are still high by comparison to prices earlier this year.
  • Prices this week took direction from wider commodity markets.
  • Lowering gas prices, weaker Brent crude prices and expectations of increased wind generation in parts of North-West Europe dampening demand for fossil fuel generation.
Wholesale price snapshot 

Wholesale price snapshot 23 July 2021

Posted by TEAM on 23 July 2021
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