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Energy Wholesale Market Review, 29 January 2021

Headlines

This week has seen mixed price movements, with prices leaning towards bearish. Day-ahead gas fell 3.3% to 59.00p/th, afflicted by periods of warmer weather, particularly at the week’s start. Day-ahead power fell 28.5% to £71.5/MWh, with increased wind generation experienced for large parts of the week, coupled with reduced demand in parallel and the new IFA2 1GW interconnector coming online. February 21 gas was down 8.5% at 54.84p/th, and March 21 gas decreased 16.1% to 47.52p/th. Most seasonal gas contracts declined last week, down by 0.9% on average, while summer 21 and winter 21 gas dropped 1.4% and 1.1% respectively, to 43.57p/th and 51.67p/th. Most seasonal power contracts declined this week, down on average by 0.4%, as summer 21 power decreased 0.9% to £52.50/MWh and winter 21 fell 0.6% to £58.65/MWh. Brent crude oil marginally reversed last week’s decline, lifting 0.8% to $55.93/bl this week. Despite prices rising, the general sentiment in the market remains cautious. Global lockdowns across many major economies continues, with little sign of easing in the coming weeks. Vaccination roll-out continues to provide some assurance to markets, providing support to prices. EU ETS carbon rose 1.6% to average €33.48/t. Like other commodity markets, news of high global case numbers of COVID-19 continues to act bearishly on the carbon price. On 29 January, the return of EUA auctions acted to push prices lower with increased supply volumes.

Baseload electricity
Day-ahead power fell 28.5% to £71.5/MWh, following increased wind generation experienced for large parts of the week, coupled with reduced demand in parallel and the new IFA2 1GW interconnector coming online. February 21 power slipped 4.1% to £67/MWh and March 21 power decreased 2.4% to £61.5/MWh.		Q221 power moved 1.7% lower to £53.37/MWh. The annual April 21 contract lost 0.8% to £55.58/MWh, 36.4% higher than the same time last year (£40.75/MWh).
Forward curve comparison		Annual April Contract
Peak electricity
Day-ahead peak power was down 39.6% to £87.00/MWh, following the day-ahead contracts lower. February 21 peak power declined 2.1% to £82.62/MWh, and March 21 peak power increased 1.1% to £68.47/MWh.		The annual April 21 peak power contract lost 0.4% to £62.01/MWh. This is 30.5% lower than the same time last year (47.5/MWh).
Forward curve comparison		Annual April contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
Most seasonal power contracts declined this week, down on average by 0.4%. Summer 21 power decreased 0.9% to £52.50/MWh, while winter 21 fell 0.6% to £58.65/MWh.		Most seasonal peak power contracts boosted this week, up 0.3% on average. Summer 21 and winter 21 peak power increased 0.3% and 0.4% respectively, to £56.54/MWh and £67.47/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude oil marginally reversed last week’s decline, lifting 0.8% to $55.93/bl this week. Despite prices rising, the general sentiment in the market remains cautious. Global lockdowns across many major economies continues, with little sign of easing in the coming weeks. Case numbers are generally responding to stringent lockdown measures however, with reports of falling numbers in Europe and China. Vaccination roll-out continues to provide some assurance to markets. Similarly, the Brent crude price continues to benefit from extended supply cut pledges from Saudi Arabia for February and March. API 2 coal rose 0.3% from the previous week to average $67.70/t.		EU ETS carbon rose 1.6% to average €33.48/t. Like other commodity markets, news of high global case numbers of COVID-19 continues to act bearishly on the carbon price. On 29 January, the return of EUA auctions acted bearishly on prices with increased supply volumes although, the market reacted strongly, clearing relatively comfortably. We may continue to see prices fluctuate week-on-week but hold onto the stronger >€32.00/t price point. Colder weather forecast also acted bullishly on price movements, with increased heating demand.
Wholesale price snapshot