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Energy Wholesale Market Review, 27 May 2022

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Wholesale gas and power prices were relatively mixed throughout the week, with gains across day-ahead markets and further out on the forward curve too. However, front month contracts across gas and power recorded losses, somewhat indicative of the on-going wholesale price volatility in recent weeks. Day-ahead gas rose 18.4% to 116.00p/th, buoyed by an undersupplied system as new outages at Langeled curtail Norwegian flows. Day-ahead power grew 18.5% to £160.00/MWh, mirroring trends set from its gas counterpart contract. Elsewhere, June 22 gas was down 12.0% at 139.56p/th, and July 22 gas decreased 8.5% to 161.45p/th. Most seasonal gas contracts increased this week though, up by 6.7% on average, with summer 23 gas rising 3.6% to 171.05p/th and winter 24 up 23.3% to average 138.15p/th. Like gas, the majority of seasonal power contracts saw gains, up on average by 2.6%, as winter with summer 23 lifted 0.9% to £163.00/MWh and winter 23 up 7.6% to average £185.00/MWh. In terms of international commodity markets, Brent crude prices lifted 2.8% to average $115.02/bl, whereas carbon markets registered losses, UK ETS lost 3.1% to average £81.18/t, while the EU ETS dropped 5.8% to average €81.87/t over the week.

Baseload electricity
Day-ahead power rose 18.5% to £160.00/MWh, following gains made from its gas counterpart contract. June 22 power slipped 7.2% at £154.25/MWh and July 22 power decreased 3.3% to £175/MWh.		Q322 power moved 6.7% lower to £190.87/MWh. The annual October 22 contract rose 0.3% to £199.25/MWh, 226.1% higher than the same time last year (£61.1/MWh).
Forward Curve Comparison		Annual April Contract
Peak electricity
Day-ahead peak power was up 20.7% to £175.00/MWh, following baseload power higher. June 22 peak power declined 15.7% at £168.25/MWh, and July 22 peak power decreased 5.9% to £188.15/MWh.		The annual October 22 peak power contract rose 0.8% to £247.08/MWh This is 251.6% higher than the same time last year (70.28/MWh).
Forward curve comparison		Annual April contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
Most seasonal power contracts boosted this week, up on average by 2.6%. Winter 22 power decreased 0.1% to £235.50/MWh, while summer 23 expanded 0.9% to £163.00/MWh.		Most seasonal peak power contracts boosted this week, up 16.2% on average. Winter 22 and summer 23 peak power increased 0.9% and 0.8% respectively, rising to £303.60/MWh and £190.55/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude oil prices lifted 2.8% this week to average $115.02/bl. Mixed fundamentals continue to impact the oil market, with bullish price drivers more significant this week. Ongoing COVID-19 lockdowns in China continues to suppress Chinese economic output and weigh on the demand outlook, albeit some of the strictess measures are beginning to ease. However, the prospect of an EU-wide embargo on Russian oil outweighed demand concerns this week. The deal is thought to include carve-outs for member states most reliant on Russian oil, such as Hungary. Similarly, the back-drop of a globally tightened brent crude market continues to provide a strong foundation of on-going price support.		Carbon markets saw bearish movements across both the EU and UK ETS markets. The UK ETS lost 3.1% to average £81.18/t, while the EU ETS dropped 5.8% to average €81.87/t over the week. Both the UK and EU ETS carbon markets remain sensitive to change, with shakers in the wider European energy landscape from Russian gas supply causing a ripple effect into carbon markets. In a latest example, the European Commission has proposed to sell allowances worth €20bn from the Market Stability Reserve with the aim to release resources to flexibly fund the path to end Europe’s dependency on Russian gas.
Wholesale price snapshot