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Energy Wholesale Market Review, 25 June 2021

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The majority of power and gas contracts increased this week, with all underlying commodity prices also rising. Day-ahead gas jumped 13.2% to 80.90p/th, driven higher during the week by colder temperatures and restricted flows from Norway. Day-ahead power rose 8.3% to £88.00/MWh, following the gas market higher, with forecasts of weak wind output early next week providing futher support. Longer-dated gas contracts were pushed higher by ongoing concerns surrounding gas storage levels and a tight European gas market, with lower imports from Norway and a lack of LNG deliveries leading to additional withdrawals from storage sites. July 21 gas surged 12.0% to 78.82p/th and August 21 gas climbed 11.7% to 78.72p/th. Seasonal gas contracts rose 7.4% on average, with winter 21 gas gaining 10.2% to 85.51p/th. These price movements fed through to the power market with July 21 power rising 9.2% to £84.00/MWh and the winter 21 contract lifting 7.4% to £90.75/MWh. Brent crude oil gained 1.7% to average $74.85/bl this week, reaching $75.57/bl – its highest level since November 2018 – on 23 June. EU ETS carbon rose 4.2% to average €54.06/t, while UK ETS carbon lifted 1.8% to average £45.90/t.

Baseload electricity
Day-ahead power rose 8.3% to £88.00/MWh, supported by rising gas prices and forecasts of weak wind generation early next week. July 21 power gained 9.2% at £84.00/MWh and August 21 power climbed 9.1% to £83.90/MWh.		Q321 power jumped 8.7% to £84.73/MWh. The annual October 21 contract lifted 7.5% to £76.63/MWh, 70.2% higher than the same time last year (£45.03/MWh).
Forward curve comparison		Annual April Contract
Peak electricity
Day-ahead peak power jumped 14.3% to £94.25/MWh, following trends in its baseload power counterpart. July 21 peak power surged 19.2% to £90.30/MWh, and August 21 peak power leapt 16.4% to £89.65/MWh.		Annual October 21 peak power rose 21.3% to £85.93/MWh. This is 68.0% higher than the same time last year (£51.16/MWh).
Forward curve comparison		Annual April contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
Most seasonal power contracts rose this week, up by 7.6% on average. Winter 21 power climbed 7.4% to £90.75/MWh, while summer 22 power gained 7.6% to £62.50/MWh.		Seasonal peak power contracts increased 21.1% on average. Winter 21 peak power surged 23.1% to £102.95/MWh and summer 22 peak power leapt 18.7% to £68.90/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude oil lifted 1.7% to average $74.85/bl, reaching $75.57/bl on 23 June, its highest price since November 2018. Oil prices were supported by a drop in the volumes of oil held in US crude stocks, in addition to fresh doubts that the US will lift sanctions on Iranian oil exports. Further signs of demand recovery, such as an increase in German economic activity, also helped push prices higher. However, some uncertainty remains on whether OPEC+ will agree to ease output cuts further when it meets on 1 July.		EU ETS carbon prices rose 4.2% to average €54.06/t. Similarly, UK ETS carbon gained 1.8% to average £45.90/t. Both markets were supported by the tight gas market and rising oil prices. However, gains were somewhat capped by uncertainty around the number of fresh EU ETS allowances that may enter the market once participants receive their free allocations later this month.
Wholesale price snapshot