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Energy Wholesale Market Review, 25 September 2020

Headlines

Most gas contracts rose this week, supported by a second consecutive weekly rise in oil prices and an increase in gas-for-power demand, the latter owing to a steady reduction in temperature throughout the week. October 20 gas lifted 5.9% to 30.87p/th, and November 20 gas increased 1.7% to 36.06p/th. Seasonal gas contracts differed to their short term counterparts, predominately falling – by an average of 0.8%. Summer 21 gas dropped 0.5% to 33.18p/th. Conversely, most power contracts fell, attributed to strong wind generation throughout the week, up on the lows experienced in the previous week. Near-term power contracts also struggled to find much support, with the October 20 power slipping 0.3% at £42.75/MWh, and November 20 power declining 1.6% to £52.13/MWh. Most seasonal power contracts declined this week, down on average by 1.2%. Winter 20 power decreased 0.8% to £50.57/MWh, while summer 21 fell 2.5% to £43.16/MWh. The EU ETS carbon price flipped downwards this week, declining 8.0% to average €26.90/t, with weak demand as a result of the on-going pandemic coupled with an increased supply of EUA’s weighing on prices significantly. Brent crude oil rose by 1.5% to average $41.89/bl, finding support from market sentiment with global consumption returning to pre-COVID levels, despite news of the fresh coronavirus restrictions.

Baseload electricity
Day-ahead power fell 10.9% to £47/MWh, following increased wind generation experienced throughout the week. October 20 power slipped 0.3% at £42.75/MWh and November 20 power decreased 1.6% to £52.13/MWh.		Q420 power moved 1.1% lower to £48.66/MWh. The annual October 20 contract lost 1.6% to £46.87/MWh, 9.1% lower than the same time last year (£51.59/MWh).
Forward curve comparison		Annual October Contract
Peak electricity
Day-ahead peak power was down 12.2% to £52.00/MWh, following its baseload counterpart lower, in light of the reductions in wind generation experienced across the week. October 20 peak power declined 0.6% at £49.33/MWh, and November 20 peak power increased 0.2% to £63.25/MWh.		The annual October 20 peak power lost 1.4% to £53.54/MWh. This is 7.6% lower than the same time last year (57.95/MWh).
Forward curve comparison		Annual October contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
Most seasonal power contracts declined this week, down on average by 1.2%. Winter 20 power decreased 0.8% to £50.57/MWh, while summer 21 fell 2.5% to £43.16/MWh.		All seasonal peak power contracts declined this week, down 1.6% on average. Winter 20 and summer 21 peak power dropped 1.0% and 2.0% respectively, falling to £59.40/MWh and £47.67/MWh.
Commodity price movements
Oil and Coal		Carbon
Following previous gains, brent crude oil prices rose again this week, seeing a 1.5% increase to average $41.89/bl, maintaining a strong position above $40/bl throughout the entirety of the week. API2 coal similarly experienced growth rising 1.6% to $59.11/t. The crude oil price was generally supported amid relative market positivity – despite some of the fresh lockdown restrictions imposed across the UK in the bid to retain control over the Coronavirus. Initial reports indicated that global oil consumption could reach pre-covid levels despite the new measures imposed.		Following the previous week’s increase, EU ETS prices fell 8.0% to average €26.90/t this week. This week’s price movements highlight the continued volatility of the EU ETS prices in recent months, struggling to find much continuity week on week. Weak demand as a result of the on-going pandemic coupled with increased supply of EUA’s weighed on prices significantly
Wholesale price snapshot