Energy Wholesale Market Review, 28 January 2022

Headlines

This week generally represented more bullish sentiment, noting there were some periods of bearish movements particularly across near-term power prices. Day-ahead power fell, lowering 33.6% to £181.00/MWh, with stronger wind and renewable generation seen across this week, a trend forecast to continue into next week. Alternatively, near-term gas prices enjoyed a period of strong price growth compared with the previous week. In support of this, day-ahead gas rose 17.1% to 219.00p/th, following intensifying gas supply concerns driven by on-going political conflict between Ukraine and Russia. February 22 gas was up 19.7% at 223.00p/th, and March 22 gas increased 20.3% to 223.00p/th. Most seasonal gas contracts boosted last week, up by 20.6% on average, while both summer 22 and winter 22 gas increased 31.6% and 31.1% respectively, lifting to 215.00p/th and 224.00p/th. All seasonal power contracts saw upward price growth this week, up on average by 15.1%, as summer 22 and winter 22 expanded 24.3% and 21.6% respectively, rising to £197.00/MWh and £203.00/MWh.

Baseload electricity
  • Day-ahead power fell 33.6% to £181.00/MWh, following periods of stronger wind and renewable generation seen thoughout much of this week.
  • February 22 power climbed 12.1% at £222/MWh and March 22 power increased 15.9% to £211/MWh.
  • Q2-22 power moved 21.6% higher to £197.00/MWh.
  • The annual April 22 contract rose 22.9% to £200.00/MWh, 298.2% higher than the same time last year (£50.23/MWh).
Forward Curve Comparison

 

Annual April Contract

Peak electricity
  • Day-ahead peak power was down 9.1% to £300.00/MWh, following baseload power lower.
  • February 22 peak power gained 20.3% at £320.00/MWh, and March 22 peak power increased 17.5% to £235.00/MWh.
  • The annual April 22 peak power rose remained unchanged at £180.00/MWh
  • This is 216.7% higher than the same time last year (56.83/MWh).

Forward curve comparison

 

Annual April contract

 

Seasonal power prices

Seasonal baseload power contracts

 

Seasonal baseload power curve

 

  • All seasonal power contracts boosted this week, up on average by 15.1%.
  • Summer 22 and winter 22 expanded 24.3% and 21.6% respectively, rising to £197.00/MWh and £203.00/MWh.
  • Most seasonal peak power contracts boosted this week, up 1.1% on average.
  • Summer 22 and winter 22 peak power remainded unchanged, sitting at £160.00/MWh and £200.00/MWh respectively.
Commodity price movements

Oil and Coal

 

Carbon

  • Brent crude prices climbed again last week, up 1.6% to average $88.79/bl, including a fresh seven-year high on 27 January at $90.20/bl.
  • Prices last week continued to find bullish price support through on-going market tightness as well as some more specific weekly trends.
  • In the past week, geopolitical tensions between Ukraine and Russia intensified. The potential threat of supply disruption from Russia has increased, fuelling concerns of future supply in an already tightened global oil market.
  • Meanwhile, API 2 coal fell 12.5% to average $114.05/t.
  • Carbon prices saw collective increase from the week prior. The UK ETS saw the largest week-on-week rise, up 11.0% to £82.38/t, with the EU ETS slightly behind, rising 7.7% to average €87.89/t.
  • The UK ETS broke record highs since the scheme’s inception in May 2021 on multiple days, with the latest high sitting at £84.00/t, aided by strong auction demand, lower renewable output at the latter stages of last week and higher near-term gas prices – influenced by ongoing geopolitical tensions.
Wholesale price snapshot 

 

Posted by TEAM on 28 January 2022