Energy Wholesale Market Review, 27 August 2021

Headlines

Bullish momentum across gas and power markets continued this week, following a short-lived bearish period of prices in the week prior. Subsequently, day-ahead gas rose 12.8% to 116.50p/th, following a stronger demand profile observed throughout the majority of the week, combined with lowering Norwegian gas flows, restricting gas supply into GB in turn. Day-ahead power mirrored the bullish trends observed in gas contracts, rising 1.4% to £108.5/MWh, taking direction from the gas market and higher demand in the week. September 21 gas was up 14.1% at 117.50p/th, and October 21 gas increased 11.8% to 118.50p/th. Seasonal gas contracts experienced similar upward movement, rising by 7.3% on average. This saw both winter 21 and summer 22 gas growing 12.7% and 5.4% respectively, lifting to 120.80p/th and 72.50p/th. All seasonal power contracts also grew, up 5.0% on average. Brent crude prices rebounded this weeks, with week-on-week prices rising for the first time in four weeks. As such, prices rose 2.7% to $70.13/bl. The UK ETS fell for the first time in nearly five weeks this week, subsequently falling 0.4% lower to £49.02/t. The EU ETS shared these losses, down 0.2% to €56.49/t.

Baseload electricity
  • Day-ahead power rose 1.4% to £108.5/MWh, following periods of stronger demand in the week and taking direction from notable gains in near-term gas contracts.
  • September 21 power climbed 10.1% at £112/MWh and October 21 power increased 3.6% to £114/MWh.
  • Q421 power moved 6.4% higher to £117/MWh.
  • The annual October 21 contract rose 7.0% to £97.75/MWh, 98.7% higher than the same time last year (£49.2/MWh).
Forward Curve Comparison

 

Annual October Contract

Peak electricity
  • Day-ahead peak power was up 1.3% to £116.50/MWh, taking direction from its baseload counterpart.
  • September 21 peak power gained 6.2% at £118.99/MWh, and October 21 peak power increased 9.3% to £121.31/MWh.
  • The annual October 21 peak power contract rose 6.6% to £109.38/MWh.
  • This is 105.1% higher than the same time last year (£53.32/MWh).

Forward curve comparison

 

Annual October contract

 

Seasonal power prices

Seasonal baseload power contracts

 

Seasonal baseload power curve

 

  • All seasonal power contracts saw gains this week, up on average by 5.0%.
  • Winter 21 and summer 22 expanded 8.4% and 5.0% respectively, rising to £116.50/MWh and £79.00/MWh.
  • All Seasonal peak power contracts boosted this week, rising 8.0% on average.
  • Winter 21 and summer 22 peak power increased 3.1% and 12.4% respectively, falling to £132.75/MWh and £86.00/MWh.
Commodity price movements

Oil and Coal

 

Carbon

  • Brent crude prices rebounded this weeks, with week-on-week prices rising for the first time in four weeks. As such, prices rose 2.7% to $70.13/bl.
  • Prices generally recovered further as the week matured, exceeding $70.0/bl on Wednesday, Thursday and Friday.
  • Full regulatory approval of the Pfizer-BioNTech vaccine in the US boosted market optimism significantly, helping to support market recovery concerns.
  • Elsewhere, prices were supported by healthy demand reports in the US, despite Coronavirus variant concerns and strong reductions in Singapore fuel stocks seen later in the week
  • The UK ETS fell for the first time in nearly five weeks this week, subsequently falling 0.4% lower to £49.02/t. The EU ETS shared these losses, down 0.2% to €56.49/t.
  • Despite the stated marginal weekly losses, prices generally remain high, with support being placed from wider international commodity markets.
  • Losses were pegged back at the end of the week ahead of reduced auctions next week
  • As we progress further towards Autumn, we will likely see the return of increased EUA auction volumes, which may stifle prices.
Wholesale price snapshot 

 

Posted by TEAM on 31 August 2021
  • Wholesale Market

    • 2021 (37)
    • +2020 (51)
    • +2019 (50)
    • +2018 (17)
  • Blog & News Archive

    • 2021 (54)
    • +2020 (84)
    • +2019 (87)
    • +2018 (59)
    • +2017 (32)
    • +2016 (33)
    • +2015 (57)
    • +2014 (26)
    • +2013 (13)
    • +2012 (8)
    • +2010 (1)