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Energy Wholesale Market Review, 23 October 2020

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All contracts increased this week, with the exception of day-ahead power. Day-ahead power decreased 4.5% to £43.75/MWh, owing to increased wind outturn as the week progressed coupled with forecasts of strong wind generation across the weekend. The month-ahead contract (November 20) gained 2.7% to £51.25/MWh. Similarly, December 20 power increased 2.2% to average £52.25/MWh. Countering trends seen in the day-ahead contract, all other seasonal power contracts experienced growth in comparison with the week prior. The majority of gas contracts moved higher this week attributed predominately to a general decline in temperatures as we progress further towards the winter months. As such, day-ahead gas lifted 6.2% to 43.00p/th. November 20 gas rose 8.8% to 44.38p/th, with December 20 gas also rising 9.0% to 46.85p/th. Summer 21 gas lifted 5.6% to 36.87p/th with the winter 21 contract lifting 2.9% to 44.35p/th. Brent crude oil marginally rose this week, seeing an increase of 0.3% to average $42.39/bl. The Brent crude oil price maintained a relatively stable position above $42.00/bl, with conflicting factors such as ongoing supply disruption in Norway and increasing levels of oil in US inventories, preventing major price shifts in either direction. EU ETS carbon dropped by a further 3.2% to average €24.47/t for the week.

Baseload electricity
Day-ahead power fell 4.5% to £43.75/MWh, owing to increased wind generation expected towards the end of the week. November 20 power climbed 2.7% to £51.25/MWh and December 20 power increased 2.2% to £52.25/MWh.		Q121 power moved 1.6% higher to £53.5/MWh. The annual April 21 contract rose 3.1% to £48.11/MWh, 0.9% lower than the same time last year (£48.54/MWh).
Forward curve comparison		Annual October Contract
Peak electricity
Day-ahead peak power was up 5.9% to £51.50/MWh. November 20 peak power declined 1.6% to £58.28/MWh, and December 20 peak power decreased 0.7% to £58.42/MWh.		The annual April 21 peak power lost 1.0% to £52.79/MWh. This is 4.0% lower than the same time last year (£55.00/MWh).
Forward curve comparison		Annual October contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
All seasonal baseload power contracts rose this week, up on average by 1.5%. Summer 21 and winter 21 power gained 3.9% and 2.3% respectively, rising to £45.16/MWh and £51.05/MWh.		Most seasonal peak power contracts increased this week, up 0.4% on average. Summer 21 and winter 21 peak power increased 1.8% and 0.3% to £48.62/MWh and £56.96/MWh, respectively.
Commodity price movements
Oil and Coal		Carbon
Brent crude oil marginally rose this week, seeing an increase of 0.3% to average $42.39/bl. The Brent crude oil price maintained relative stability above $42.00/bl for the entirety of the week, despite fresh restrictions imposed across many economies this week. The Brent crude oil price continued to draw on its recent resilience, supported by OPEC members not ruling out supply cuts in an attempt to provide a boost to prices. While prices remain stable, the market is anticipating a notable decline amid concerns of rising case numbers of the Coronavirus in the coming weeks. API 2 coal reversed the previous week’s decline, lifting 1.3% to average $59.50/t for the week.		EU ETS carbon fell again this week. Prices dropped by a further 3.2% to average €24.47/t for the week. The drop in prices this week is symptomatic of the general sentiment observed across many global commodity markets, as the threat of Coronavirus disruption remains. Compounding this week’s decline was also a general concern of a ‘hard Brexit’ and uncertainties in future carbon trading arrangements for the UK. No firm route forward has been agreed despite the 1 January back-stop date drawing closer.
Wholesale price snapshot