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Energy Wholesale Market Review, 24 June 2022

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This week has seen mixed movements across gas and power wholesale contracts, but with day-ahead markets enjoying price growth in the week on the back of some bullish market fundamentals at play. Subsequently, day-ahead gas rose 17.2% to 170.00p/th, helped by periods of increased gas-for-power demand at the week’s start and maintenance works at select parts of the Norwegian Continental Shelf (NCS), lowering flows into GB. Similarly, day-ahead power rose 2.4% to £174.00/MWh, taking direction from upward movements of its equivalent gas contract, coupled with periods of low wind outturn at the front-end of this week. Conversely, July 22 gas was down 21.1% at 185.76p/th, and August 22 gas decreased 10.6% to 240.35p/th. Elsewhere, most seasonal gas contracts rose last week, up by 3.5% on average, with both winter 22 and summer 23 gas increasing 8.0% and 4.5% respectively, lifting to 338.05p/th and 213.55p/th. Seasonal power contracts saw similar movements, broadly following their gas counterparts, up on average by 2.0%, as winter 22 and summer 23 increased 5.2% and 2.7% respectively, rising to £315.00/MWh and £190.00/MWh. For international commodity markets, they equally did not hold a universal trend, with Brent crude prices falling 7.1% this week to average $111.73/bl, while EU ETS prices climbed 0.4% to average €83.75/t. On the flip side, UK ETS prices fell marginally, down 0.8% to £80.98/t.

Baseload electricity
Day-ahead power rose 2.4% to £174.00/MWh, supported by higher gas prices and benefitting from periods of lower wind outturn at the front end of the week. July 22 power slipped 7.8% at £207.5/MWh and August 22 power decreased 3.3% to £236.00/MWh.		Q322 power moved 3.6% lower to £242.5/MWh. The annual October 22 contract rose 4.2% to £252.5/MWh, 287.0% higher than the same time last year (£65.25/MWh).
Forward Curve Comparison		Annual October Contract
Peak electricity
Day-ahead peak power was up 5.7% to £185.00/MWh, following its baseload power contract higher. July 22 peak power upticked 0.1% at £219.32/MWh, and August 22 peak power increased 5.1% to £245.92/MWh.		The annual October 22 peak power rose 6.7% to £298.25/MWh This is 387.3% higher than the same time last year (61.2/MWh).
Forward curve comparison		Annual October contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
The majority of seasonal power contracts boosted this week, up on average by 2.0%. Winter 22 and summer 23 expanded 5.2% and 2.7% respectively, rising to £315.00/MWh and £190.00/MWh		Mirroring movements in baseload contracts, most seasonal peak power contracts also grew this week, up 3.7% on average. Winter 22 and summer 23 peak power increased 8.2% and 4.2% respectively, rising to £379.50/MWh and £217.00/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude prices fell 7.1% this week to average $111.73/bl. Predominately, wider market concerns over sluggish global demand growth across oil markets weighed on prices throughout the week – with concerns demand for Brent crude is not improving at the rate expected. Elsewhere, reports that US president Joe Biden has called for fuel tax cuts to soften the costs consumers are paying at the pumps will weigh on prices in the near-term if this action is progressed. API 2 coal rose 15.5% to average $258.60/t.		The EU and UK ETS experienced conflicting price movements last week. Subsequently, the EU ETS climbed 0.4% to average €83.75/t whereas the UK ETS fell marginally, down 0.8% to £80.98/t. As a piece of industry news, the European parliament committee as of 22 June agreed on new parliamentary reforms for the EU ETS carbon market – something they had failed to agree on earlier this month. These reforms form part of a legislative package presented by the Commission on July 14, 2021, to implement the climate transition, which should enable the EU-27 to reduce their CO2 emissions by 55% by 2030 in compliance with the Paris climate agreement. As part of these proposals, the EU’s executive European Commission has planned to remove a significant amount of surplus EUA’s from the market.
Wholesale price snapshot