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Energy Wholesale Market Review, 26 November 2021

Headlines

The volatility in near-term pricing across gas and power prices was evident this week, with significant gains made, particularly in baseload and peak power contracts. Day-ahead gas rose 1.4% to 225.00p/th, following periods of much colder weather making its way from the continent and across the UK. Day-ahead power jumped 84.8% to £425.00/MWh, with tight system margins expected on Monday amid notably low wind generation. December 21 gas slipped 0.2% to 224.62p/th, and January 22 gas decreased 0.5% to 230.37p/th. Most seasonal gas contracts increased this week, up by 2.9% on average, as summer 22 and winter 22 gas climbed 2.0% and 2.5% respectively, lifting to 110.90p/th and 114.10p/th. All seasonal power contracts rose this week, up on average by 5.3%. Summer 22 and winter 22 gained 3.2% and 7.5% to £114.85/MWh and £122.50/MWh, respectively.

Baseload electricity
Day-ahead power rose 84.8% to £425.00/MWh, with tight system margins forecast for Monday. December 21 power climbed 13.0% to £260.00/MWh and January 22 power increased 11.4% to £275.00/MWh.		Q122 power moved 12.1% higher to £252.25/MWh. The annual April 22 contract rose 5.4% to £118.68/MWh, 153.0% higher than the same time last year (£46.91/MWh).
Forward Curve Comparison		Annual April Contract
Peak electricity
Day-ahead peak power was up 127.8% to £615.00/MWh, following baseload power higher December 21 peak power gained 35.6% to £305.00/MWh, and January 22 peak power increased 55.7% to £425.00/MWh.		The annual April 22 peak power rose 1.8% to £128.75/MWh. This is 145.1% higher than the same time last year (£52.53/MWh).
Forward curve comparison		Annual April contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
All seasonal power contracts increased this week, up on average by 5.3%. Summer 22 and winter 22 climbed 3.2% and 7.5% respectively, rising to £114.85/MWh and £122.50/MWh.		Most seasonal peak power contracts rose this week, up 0.2% on average. Summer 22 peak power increased 3.7% to £127.49/MWh, while winter 22 peak power remained unchanged at £130.00/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude prices fell 1.4% from the previous week to average $79.97/bl. Prices still remain ~70% higher than the same time a year prior. There was a generally bearish sentiment felt across Brent crude markets this week. The Covid-19 crisis in continental Europe has intensified, with rising infections rates and threats of the Delta variant. This has forced some countries into lockdown, fuelling concerns over a down-turn in demand. With tight market fundamentals, major economies in Japan, USA and China are looking to release strategic oil reserves, also weighing prices down.		Carbon prices saw strong gains last week, with UK ETS prices up 11.3% to average £66.58/t. The EU ETS mirrored these trends, up 5.6% to average €70.69/t. The EU ETS reached a record high of €72.92/t on Thursday 25 November. A cold weather front making its way across much of North-West Europe and the UK supported carbon prices, particularly as the week matured, with increased EUA demand required to cover gas-fired power generation. Lower periods of wind and renewable output supported carbon prices also, particularly evident at the week’s start.
Wholesale price snapshot