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Energy Wholesale Market Review, 24 January 2020

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Most power and gas contracts fell this week, driven down by several bearish factors. Day-ahead gas lost 5.9% to 27.20p/th, as greater wind generation later in the week weighed on prices. Day-ahead power dropped 8.1% to £35.40/MWh despite peaking above £40.00/MWh in the middle of the week due to low wind generation. February 20 gas was down 4.5% at 27.35p/th and March 20 gas decreased 6.1% to 26.25p/th. All seasonal gas contracts declined this week, down by 5.4% on average, while summer 20 and winter 20 gas dropped 5.3% and 7.5% to 25.95p/th and 37.50p/th, respectively. All seasonal power contracts followed gas and declined this week, down on average by 4.1%, as summer 20 power decreased 4.1% to £35.90/MWh, while winter 20 fell 5.4% to £44.15/MWh. Brent crude oil slipped 1.7% to $63.55/bl, ending the week at $61.75/bl, over fears that the outbreak of the coronavirus in Wuhan, China will hamper the country’s oil demand. EU ETS carbon increased this week, rising 1.9% to average €24.96/t although prices continue to struggle on low demand in the current mild winter season. API 2 coal averaged $60.51/t, declining throughout the week to continue the bearish trend seen with coal prices.

Baseload electricity
Day-ahead power fell 8.1% to £35.40/MWh as greater wind generation later in the week weighed on prices. February 20 power slipped 3.5% to £37.00/MWh and March 20 power decreased 3.9% to £36.00/MWh.		Q220 power moved 4.6% lower to £35.85/MWh. The Annual April 20 contract lost 4.8% to £40.03/MWh, 27.2% lower than the same time last year (£55.02/MWh).
Forward curve comparison		Annual October Contract
Peak electricity
Day-ahead peak power went down 6.4% to £40.00/MWh, following its baseload counterpart lower. February 20 peak power declined 4.2% to £42.05/MWh, and March 20 peak power decreased 3.4% to £39.90/MWh.		The annual April 20 peak power lost 4.7% to 45.40/MWh. This is 26.2% lower than the same time last year (61.53/MWh).
Forward curve comparison		Annual October contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
All seasonal power contracts declined this week, down on average by 4.1%. Summer 20 power decreased 4.1% to £35.90/MWh, while winter 20 fell 5.4% to £44.15/MWh.		All Seasonal peak power contracts declined this week, down £4.3% on average. Summer 20 and winter 20 peak power dropped 4.0% and 5.3% respectively, falling to £39.75/MWh and £51.05/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude oil sipped 1.7% to average $63.56/bl, ending the week at $61.75/bl, over fears that the outbreak of the coronavirus in Wuhan, China will hamper the country’s oil demand. Currently, the largest global importer of oil, stable consumption of the commodity in China is vital to upholding Brent prices. With the city of over 11mn people in near-lockdown, oil consumption within the city has decreased due to a lack of movement, while oil prices have also been weighed upon by the lack of air travel both internationally and domestically. API 2 coal averaged $60.51/t, declining throughout the week to continue the bearish trend seen with coal prices.		EU ETS carbon increased this week, rising 1.9% to average €24.96/t although prices continue to struggle on low demand in the current mild winter season. In a report published on 22 January, analysts at Refinitiv announced that world carbon markets grew by 34% in €194bn in value in 2019, despite a decrease in volume of trades. The largest increase was by the European market, which expanded by 30% to €169bn, with analysts citing the introduction of the Market Stability Reserve (MSR) the largest source of growth.
Wholesale price snapshot