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Energy Wholesale Market Review, 27 September 2019

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Nearly all wholesale power and gas contracts, and commodities moved lower. The exception was the day-ahead contracts, with day-ahead power and gas rising 4.6% and 11.5% to £40.0/MWh and 26.8p/th respectively, supported by weaker wind generation and cooler temperatures forecast next week. October and November 19 power dropped 0.9% and 2.2% to £42.0/MWh and £51.9/MWh respectively. The expected return of the Hartlepool 2 (580MW) nuclear reactor on 19 October will bring total available nuclear capacity to 7.5GW (out of 9.0GW), helping offset any periods of lower wind generation this winter. All seasonal power contracts declined, dropping 0.7% on average. October and November 19 gas were down 1.9% and 1.8% to 32.0p/th and 45.1p/th respectively. October 19 gas has been pressured by expectations of comfortable gas supplies next month as the usual maintenance in September comes to an end and several LNG tankers are scheduled to arrive early in the month. All seasonal gas contracts moved lower, down 0.8% on average. Brent crude oil fell 3.8% to average $63.1/bl, with prices slipping from recent highs as previous concerns of lower Saudi Arabian production have eased. API 2 coal prices reversed the previous week’s gains, dropping 3.5% to average $67.6/t, its first weekly decline in four weeks. EU ETS carbon fell 2.5% to average €25.5/t, despite the UK Supreme Court’s ruling that the prorogation of Parliament was unlawful, which will likely ease concerns of a no-deal Brexit flooding the market with EUAs.

Baseload electricity
Day-ahead power rose 4.6% to £40.0/MWh, supported by higher gas prices and weaker wind generation. Month-ahead power fell 0.9% to £42.0/MWh and November 19 power dropped 2.2% to £51.9/MWh.		Q419 power decreased 1.6% to £49.6/MWh. The annual October 19 power contract declined 0.6% to end the week at £51.6/MWh. This is 11.7% lower than the same time last year (£58.4/MWh).
Forward curve comparison		Annual October Contract
Peak electricity
Day-ahead peak power rose 12.7% to £46.5/MWh, £6.5/MWh above its baseload counterpart. October 19 peak power slipped 0.3% to £46.9/MWh. November 19 peak power lowered 2.4% to £59.5/MWh.		Annual October 19 peak power was 0.7% lower at £56.9/MWh, £7.8/MWh above its baseload power. The contract is 2.4% above its value this time last month (£55.6/MWh), but 11.9% below the same time last year when it was £64.7/MWh.
Forward curve comparison		Annual October contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
All seasonal baseload power contracts moved lower, down 0.6% on average. Winter 19 power declined 0.9% to £53.6/MWh, while summer 20 lost 0.3% to £49.6/MWh.		Seasonal peak power contracts were 0.5% lower on average. Winter 19 peak power decreased 0.7% to £60.0/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude oil fell 3.8% to average $63.1/bl. Prices have slipped from recent highs as previous concerns of lower Saudi Arabian production have eased, with the country’s production recovering to above 10.5mn bpd, 1.5mn below pre-attack levels. Last week, the International Energy Agency (IEA) announced it may lower its growth estimate forecasts for global oil demand for 2019 and 2020 if global economic growth continues to weaken. API 2 coal prices reversed the previous week’s gains, dropping 3.5% to average $67.6/t. Prices have been pressured by weaker demand amid lower gas prices and high coal stocks, with ARA terminals rising to 7.1mt, the highest since May.		EU ETS carbon fell 2.5% to average €25.5/t. Although the UK Supreme Court’s ruling that the prorogation of Parliament was unlawful will likely ease concerns of a no-deal Brexit flooding the market with EUAs, carbon prices have fallen as higher volumes of EUAs were auctioned this week. In addition, forecasts of higher wind generation early in October in parts of NW Europe will also ease demand for EUAs next week.
Wholesale price snaphot