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Energy Wholesale Market Review, 24 April 2020

Headlines

Most power and gas contracts fell again this week as lockdown measures continued to stifle both power and gas demand. Day-ahead gas fell 17.3% to 11.25p/th, with higher LNG send-out pressuring prices amid an oversupplied as market. Despite falling to a record low of £10.00/MWh early this week, day-ahead power opposed gas and ended the week up 15.1% at £25.60/MWh, due to forecasts of lower wind output early next week. May 20 gas was down 15.1% at 13.03p/th and June 20 gas decreased 15.2% to 13.73p/th. All seasonal gas contracts declined this week, down by 4.6% on average, while both winter 20 and summer 21 gas dropping 4.9% and 5.7% respectively, to 32.04p/th and 28.81p/th. All seasonal power contracts declined this week, down on average by 2.0%, as winter 20 power decreased 1.7% to £41.03/MWh, while summer 21 fell 2.2% to £36.39/MWh. Brent crude oil prices crashed again this week as WTI prices turned negative, sending the market into unknown territory. Brent crude prices lost 24.8% to average $21.89/bl, but on 22 April slid to a 21-year low under $16/bl. Prices stabilised late in the week as oil producers pledged to further output cuts. API 2 coal saw small losses last week, falling 1.1% to average $54.10/t, despite demand in China slowly regaining following the easing of lockdown restrictions. Whilst EU ETS carbon prices were impacted by oil price movements, they ultimately rose 2.4% to average €20.59/t. Carbon prices were supported by reduced nuclear power in France by EDF – resulting in a rise in fossil fuel imports and a greater demand for EUA’s.

Baseload electricity
Day-ahead power rose 15.1% to end the week at £25.60/MWh, on forecasts of a drop in wind output. May 20 power slipped 7.1% at £24.25/MWh and June 20 power decreased 7.3% to £25.97/MWh.		Q320 power moved 4.8% lower to £29.51/MWh. The Annual October 20 contract lost 2.0% to £38.71/MWh, 28.1% lower than the same time last year (£53.85/MWh).
Forward curve comparison		Annual October Contract
Peak electricity
Day-ahead peak power followed its baseload counterpart and was up 12.9% to £27.10/MWh. May 20 peak power declined 0.1% at £27.67/MWh, and June 20 peak power decreased 2.1% to £29.38/MWh.		The Annual October 20 peak power contract lost 3.2% to 44.28/MWh. This is 26.0% lower than the same time last year (59.85/MWh).
Forward curve comparison		Annual October contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
All seasonal power contracts declined last week, down on average by 2.0%. Winter 20 power decreased 1.7% to £41.03/MWh, while summer 21 fell 2.2% to £36.39/MWh.		All seasonal peak power contracts boosted this week, up £1.3% on average. Winter 20 and summer 21 peak power increased 2.2% and 4.4% respectively, falling to £47.42/MWh and £41.13/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude oil prices crashed again this week as WTI prices turned negative, sending the market into unknown territory. Brent crude prices lost 24.8% to average $21.89/bl, at one point on 22 April dropping to a 21-year low of below $16/bl. The expiratory of futures oil contracts on 21 April for May delivery saw investors looking to sell these contracts on 20 April, as is usual at this point every month. However, significant lack of demand for the commodity saw speculators with no view to consuming the oil paying for others to take it off their hands, resulting in the negative WTI price for the first time in history. Prices stabilised late in the week at just under $22/bl as a flare up in geopolitical tensions in the Middle East helped to support prices.		API 2 coal saw small losses this week, falling 1.1% to average $54.10/t, despite demand in China slowly regaining following the easing of lockdown restrictions. Lowered stocks at ARA terminals (Northwest Europe) helped limit further coal price losses. Whilst EU ETS carbon prices were influenced by oil price movements, they ultimately rose 2.4% to average €20.59/t. Carbon prices were supported by reduced nuclear power in France by EDF – resulting in a rise in fossil fuel imports and a greater demand for EUA’s.
Wholesale price snapshot