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Energy Wholesale Market Review, 24 May 2019

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Near-term power and gas contracts decreased this week, amid an oversupplied gas system and decreasing demand. Most seasonal contracts moved higher, despite a fall in global commodity prices. Day-ahead gas slipped 1.8% to 29.9p/th, with strong flows from Norway and healthy LNG send-out. Month-ahead gas lost 1.8% to 30.2p/th and July 19 gas fell 3.6% to 30.1p/th. Seasonal gas contracts increased 0.5% on average. However, the winter 19 contract dropped 0.6% to 54.3p/th. Day-ahead power fell 9.4% to £37.0/MWh, amid falling gas prices and decreasing demand. Month-ahead power slipped 0.9%% to £41.0/MWh and July 19 power lost 1.2%, also falling to £41.0/MWh. Nearly all seasonal power contracts moved higher, rising 0.8% on average. However, winter 19 power declined 0.1% to £57.8/MWh. Brent crude oil slipped 1.0% to average $71.0/bl this week. Data showing that US crude inventories rose to their highest levels since July 2017 drove prices downwards. API 2 coal prices lost 3.2% to average $68.0/t. Prices were pushed lower by healthy supply and high stock levels in Europe. EU ETS carbon prices dropped 2.8% to average €25.0/t. Weak results from Thursday’s auction and the depressive effect of lower oil prices and global stock markets on the energy market conspired to push prices lower.

Baseload electricity
Day-ahead power fell 9.4% to £37.0/MWh, amid falling gas prices and decreasing demand. Month-ahead power slipped 0.9%% to £41.0/MWh and July 19 power lost 1.2% to £41.0/MWh.		Annual October 19 power rose 0.2% week-on-week to £53.3/MWh. The contract is 4.2% lower than the same time last month (£55.6/MWh).
Forward curve comparison		Annual April Contract

Peak electricity
Day-ahead peak power dropped 11.0% to £38.5/MWh, just £1.5/MWh above its baseload counterpart. Day-ahead peak power is 34.7% lower than the same time last year when it was £59.0/MWh. June and July 19 peak power lost 1.2% and 1.0% to £45.0/MWh and £45.3/MWh, respectively.		Annual October 19 peak power slipped 0.1% to end the week at £59.1/MWh, £5.8/MWh above its baseload power counterpart. The contract is 3.5% below its value this time last month (£61.3/MWh), but 4.0% above the same time last year when it was £56.8/MWh.
Forward curve comparison		Annual April contract

Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
Seasonal power contracts rose 0.8% on average. However, winter 19 power declined 0.1% to £57.8/MWh. Summer 20 power gained 0.6% to £48.8/MWh.		Seasonal peak power contracts climbed 0.9% on average, although winter 19 peak power fell 0.3% to £64.8/MWh. Summer 20 peak power lifted 0.5% to £53.4/MWh.

Commodity price movements
Oil and Coal		Carbon
Brent crude oil slipped 1.0% to average $71.0/bl, this week. Data showing that US crude inventories rose to their highest levels since July 2017 drove prices downwards. Additionally, outlooks of global oil demand were dampened by the lack of progress in talks between the US and China, and slower than expected economic growth in the US, Europe and Japan. API 2 coal prices lost 3.2% to average $68.0/t. Prices were pushed lower by healthy supply and high stock levels in Europe. Data showing that Germany’s coal-fired generation fell 22% year-on-year in April further weighed on prices.		EU ETS carbon prices dropped 2.8% to average €25.0/t. Weak results from Thursday’s auction and the depressive effect of lower oil prices and global stock markets on the energy market conspired to push prices lower. The lack of progression in the UK’s Brexit withdrawal bill added further downward pressure on carbon prices.

Wholesale price snapshot