Energy Wholesale Market Review, 3 April 2020

Headlines

Most power and gas contracts fell mixed this week, though a few rises were seen in future winter contracts. Day-ahead gas fell 16.0% to a fresh 10-year low of 16.00p/th on forecasts of decreasing consumption levels, and pushed lower by expectations of very mild weather next week. Day-ahead power fell 36.2% to a new all-time low of £18.50/MWh with falls the result of similar reasoning to that of gas. May 20 gas was down 11.7% at 16.17p/th, and June 20 gas decreased 8.9% to 16.99p/th. All seasonal gas contracts declined this week, down by 1.5% on average, while both winter 20 and summer 21 gas dropped 0.9% and 1.6% respectively, subsiding to 32.65p/th and 29.23p/th. Most seasonal power contracts boosted this week, up on average by 0.2%, as winter 20 power expanded 0.2% to £39.12/MWh, while summer 21 remained at £35.00/MWh. Brent crude oil fell by 2.1% to $26.23/bl over reports that US and Russia were looking to agree a deal to stabilise oil prices. Brent oil prices then reported their biggest daily gain on record on 2 April following the announcement by Donald Trump that Saudi Arabia and Russia could announce a major cut to oil production. EU ETS carbon gained by 6.2% to €17.33/t, reflecting the rise in the oil market. API 2 coal reversed gains seen in recent weeks, falling 4.5% to average $55.06/t, as the effect of lowered demand begins to take effect on the coal market.

Baseload electricity
  • Day-ahead power fell 36.2% to a record low of £18.50/MWh following forecasts of low demand as a result of lockdown measures and seasonally high temperatures.
  • May 20 power slipped 7.8% at £24.50/MWh and June 20 power decreased 4.5% to £26.00/MWh.
  • Q320 power moved 1.0% lower to £29.00/MWh.
  • The Annual October 20 contract rose 0.1% to £37.06/MWh, 30.5% lower than the same time last year (£53.32/MWh).

Forward curve comparison

Baseload electricity Forward curve comparison 3 April 2020

Annual October Contract

Baseload electricity Annual April contract 3 April 2020

Peak electricity
  • Day-ahead peak power was down 0.2% to £29.95/MWh, reflecting its baseload counterpart.
  • May 20 peak power Declined 6.1% at £27.89/MWh, and June 20 peak power decreased 4.1% to £29.60/MWh.
  • The Annual October 20 peak power lost 2.3% to 42.00/MWh.
  • This is 29.4% lower than the same time last year (59.53/MWh).

Forward curve comparison

Peak electricity Forward curve comparison 3 April 2020

Annual October contract

Seasonal power prices

Seasonal baseload power contracts

Seasonal power prices Seasonal baseload power contracts 3 April 2020

Seasonal baseload power curve

Seasonal power prices Seasonal baseload power curve 3 April 2020

  • Seasonal power contracts were mixed this week, but rose on average by 0.2%.
  • winter 20 power rose 0.2% to £39.12/MWh, while summer 21 was the same at £35.00/MWh.
  • Seasonal peak power contracts were also mixed this week, moving down £1.4% on average.
  • Winter 20 and summer 21 peak power dropped 2.4% and 2.2% respectively, falling to £45.17/MWh and £38.83/MWh.
Commodity price movements

Oil and Coal

Commodity price movements Oil and coal 3 April 2020

Carbon

Commodity price movements Carbon 3 April 2020

  • Brent crude oil fell 2.1% to average $26.23/bl this week, though some strong gains were seen late in the week.
  • Opening at a fresh 17-year low on 30 March, oil prices remained low on lack of any bullish indicators.
  • Prices began to rise on 31 March over reports that US and Russia were looking to agree a deal to stabilise oil prices.
  • Brent oil prices then reported their biggest daily gain on record on 2 April following the announcement by Donald Trump that Saudi Arabia and Russia could announce a major cut to oil production.
  • The President of the United States tweeted that the cuts by both countries could amount to close to 10mn bpd, possibly more.
  • API 2 coal reversed gains seen in recent weeks, falling 4.5% to average $55.06/t, as the effect of lowered demand begins to take effect on the coal market.
  • Record-low LNG prices has not supported coal prices; Japan and South Korea (two of the world’s largest importers) will like look buy less coal in coming weeks as a result of cheap LNG.
  • EU ETS carbon prices remained low this week, but rose 6.2% to average €17.33/t. As price movements continue to follow those in oil.
  • Lockdown restrictions in many EU countries has seen volume demand at EUA auctions drop off in recent weeks.
Wholesale price snapshot

Wholesale price snapshot 3 April 2020

Posted by TEAM on 3 April 2020
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