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Energy Wholesale Market Review, 27 March 2020

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Most power and gas contracts fell again this week, as a declining global economy has begun to reflect more heavily onto the UK energy market. A decline in forecast consumption and high than expected temperatures has seen day-ahead gas fall 22.6% to 19.05p/th, reaching more than a 10-year low on 27 March. Day-ahead power fell 5.7% to £29.00/MWh as declining industrial consumption pressed on prices. Slight backwardation was shown in gas prices, as April 20 gas was down 18.1% at 18.81p/th, and May 20 gas decreased 17.8% to 18.32p/th. Most seasonal gas contracts declined last week, down by 3.7% on average, while both summer 20 and winter 20 gas dropped 14.6% and 3.9% respectively, subsiding to 19.75p/th and 32.94p/th. All seasonal power contracts declined this week, down on average by 3.5%, as summer 20 power decreased 9.6% to £28.35/MWh, while winter 20 fell 3.0% to £39.05/MWh. Brent crude oil fell by 8.2% to $26.79/bl as action taken by central banks around the world was enough to lift global equity markets, but failed to have any lasting effect on oil prices, which continue to fall on market concerns over future demand for the commodity. EU ETS carbon slipped by 6.9% to average €16.32/t, despite rising to near €17/t late on in the week as prices followed oil movements. API 2 coal bucked the trend seen by other commodities and climbed by 2.7% to $57.16/t.

Baseload electricity
Day-ahead power fell 5.7% to £29.00/MWh, as lower demand on the NTS has pressed upon power prices in recent days. April 20 power slipped 16.3% at £26.80/MWh and May 20 power decreased 16.1% to £26.57/MWh.		Q220 power moved 12.8% lower to £27.12/MWh. The Annual April 20 contract lost 5.9% to £33.70/MWh, 31.9% lower than the same time last year (£49.52/MWh).
Forward curve comparison		Annual October Contract
Peak electricity
Day-ahead peak power was down 10.4% to £30.00/MWh with peak demand levels greatly reduced due to lockdown measures imposed on the public. April 20 peak power Declined 13.4% at £29.27/MWh, and May 20 peak power decreased 13.2% to £29.70/MWh.		The Annual April 20 peak power lost 4.2% to 39.12/MWh. This is 29.8% lower than the same time last year (55.73/MWh).
Forward curve comparison		Annual October contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
All seasonal power contracts declined last week, down on average by 3.5%. summer 20 power decreased 9.6% to £28.35/MWh, while winter 20 fell 3.0% to £39.05/MWh.		Most seasonal peak power contracts declined this week, down £2.6% on average. Summer 20 and winter 20 peak power dropped 8.8% and 0.7% respectively, falling to £31.94/MWh and £46.30/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude oil fell 8.2% to average $26.79/bl as prices twice dropped below $26/bl this week, extending 17-year lows. Prices were volatile this week, but ultimately ended the week lower at $25.96/bl. A rise in fiscal action taken by central banks around the world – notably the ECB and US Federal Reserve – saw oil prices make some early week gains. Repots of rising stockpiles around the world adds to the oversupply of the commodity. Global measures to help prevent the spread of Covid-19 has seen demand for oil fall increasingly sharply in recent weeks. Ever widening demand/supply market will continue to weigh on prices.		API 2 coal opposed oil again and rose, rising 2.7% to average $57.16/t as coal prices were relatively unchanged when compared to other commodity markets. Lower wind generation across Europe and decreased consumption in India acted as opposite drivers last week. EU ETS carbon prices remained low last week, falling a further 6.9% to average €16.32/t. Opening at €14.90/t on Monday 23 March, prices made marginal gains throughout the week as EUA auctions saw higher demand, mostly in reaction to stimulus provide by central banks.
Wholesale price snapshot