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Energy Wholesale Market Review, 23 November 2018

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This week, the majority of wholesale power and gas prices fell, following Brent crude oil and API 2 coal prices lower. Prompt wholesale power and gas contracts were pressured by revised temperature forecasts, which are higher than previously expected for the rest of 2018. Most baseload power contracts fell this week. The day-ahead contract slid 4.6% to £67.0/MWh. Wind generation is forecast to reach 10.0GW on 28 November, with the return of Heysham 2 nuclear plant on 24 November offering further supply security. Day-ahead gas dropped 3.9% to end the week at 67.3p/th. Prices were pressured by milder temperature forecasts and the gas system being oversupplied across the week amid high LNG send-out. The weekly average Brent crude oil price fell for a seventh consecutive week, down 5.3% to average $64.3/bl. Oil prices plummeted to $58.9/bl during the day on 23 November. This followed news earlier in the week that US crude stocks rose for a ninth consecutive week to their highest level since December 2017. API 2 coal prices dropped 4.6% to average $83.7/t, down from $87.8/t the previous week. Prices fell to $83.0/t on 21 November, the lowest since April as Chinese demand for the commodity continues to fall following the country’s decision to stop seaborne thermal coal imports until 2019. EU ETS carbon prices continued to recover, experiencing a third consecutively weekly rise. Prices were up 1.3% to average €19.9/t and ended the week above €21.0/t for the first time in seven weeks.

Baseload electricity
Day-ahead power dropped 4.6% to £67.0/MWh. The contract started the week at £60.3/MWh, with higher wind generation expected the following day. December 18 and January 19 power lowered 6.1% and 4.3% to £65.5/MWh and £67.0/MWh respectively.		Annual April 19 power decreased 2.2% to £59.6/MWh. The contract is 2.2% below the same time last month when it was £59.9/MWh, and 33.0% above the same period last year (£44.8/MWh).
Forward curve comparison		Annual October Contract

Peak electricity
Day-ahead peak power gained 3.1% week-on-week to £75.3/MWh. This was £8.3/MWh above its baseload counterpart, a £5.3/MWh increase week-on-week. Month-ahead peak power went down 6.4% to end the week at £72.2/MWh, £6.7/MWh above its baseload counterpart.		Week-on-week, annual April 19 peak power went down 1.8% to £65.4/MWh. The contract was £5.8/MWh above its baseload power counterpart. The contract was 0.3% below its price last month (£65.6/MWh) and 29.6% higher than its value last year (£50.5/MWh).
Forward curve comparison		Annual April Contract

Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
Most seasonal baseload power contracts fell, down 1.0% on average, with summer 21 the exception. Summer and winter 19 power went down 2.6% and 1.9% to £56.7/MWh and £62.5/MWh respectively.		All seasonal peak power contracts decreased this week, down 1.2% on average. Prices followed their gas counterparts, with seasonal gas contracts 3.0% lower on average.

Commodity price movements
Oil and Coal		Carbon
The weekly average Brent crude oil price fell for a seventh consecutive week, down 5.3% to average $64.3/bl. Within-day oil prices plummeted to $58.9/bl on 23 November, a 13-month low. This followed news earlier in the week that US crude stocks rose for a ninth consecutive week to their highest since December 2017 at 446.9mn barrels. API 2 coal prices dropped 4.6% to average $83.7/t, down from $87.8/t the previous week. Prices fell to $83.0/t on 21 November, the lowest since April as Chinese demand for the commodity continues to fall following the country’s decision to stop seaborne thermal coal imports until 2019.		EU ETS carbon prices continued to recover, experiencing a third consecutively weekly rise. Prices were up 1.3% to average €19.9/t and ended the week above €21.0/t for the first time in seven-weeks. Prices have resurged as cheaper coal prices and favourable clean dark spreads have increased demand for permits in Europe. With API 2 coal prices expected to remain near or below current levels, EU ETS carbon could rise further as coal fired-power generation becomes economically attractive compared to gas.

Wholesale price snapshot