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Energy Wholesale Market Review, 3 January 2020

Headlines

Most power and gas contracts fell this week, with only the day-ahead gas contract as the exception. Day-ahead gas rose 6.5% to 28.75p/th, following higher industrial consumption on return from the festive season. Day-ahead power fell 1.0% to £34.00/MWh with high wind generation throughout the week. February 20 gas was down 6.5% at 32.01p/th, and March 20 gas decreased 4.7% to 31.61p/th. All seasonal gas contracts declined this week, down by 3.5% on average, as summer 20 and winter 20 gas dropped 5.0% and 4.0% respectively, subsiding to 30.00p/th and 43.67p/th. All seasonal power contracts declined this week, down on average by 3.6%, as summer 20 power decreased 7.3% to £39.40/MWh, while winter 20 fell 3.8% to £49.20/MWh. Brent crude oil rose by 0.9% to $67.50/bl as the US strike on Baghdad airport saw prices shoot up by $2.28/bl on Friday 3 January, on concerns that this could cause disruption to Middle Eastern oil supplies. EU ETS carbon slipped by 3.8% to €25.25/t as prices continued to suffer on low trading volumes after the festive period. Prices began the new year trading at €24.59/t, lower than at the end of 2019. API 2 coal lost 0.1% to average $56.80/t.

Baseload electricity
Day-ahead power fell 1.0% to £34.00/MWh. February 20 power slipped 5.5% to £41.42/MWh and March 20 power decreased 4.3% to £40.38/MWh.		Q220 power moved 3.2% lower to £39.58/MWh. The Annual April 20 contract lost 5.4% to £44.30/MWh, 18.1% lower than the same time last year (£54.09/MWh).
Forward curve comparison		Annual October Contract
Peak electricity
Day-ahead peak power was up 1.2% to £40.50/MWh. February 20 peak power declined 6.8% to £46.68/MWh, and March 20 peak power decreased 3.3% to £44.44/MWh.		The Annual April 20 peak power lost 4.3% to 49.98/MWh. This is 18.3% lower than the same time last year (61.20/MWh).
Forward curve comparison		Annual October contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
All seasonal power contracts declined this week, down on average by 3.6%. Summer 20 power decreased 7.3% to £39.40/MWh, while winter 20 fell 3.8% to £49.20/MWh.		All seasonal peak power contracts declined this week, down £3.0% on average. Summer 20 and winter 20 peak power dropped 5.8% and 3.0% respectively, falling to £43.66/MWh and £56.31/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude oil gained 0.9% to average $67.50/bl. Brent crude oil continued to extend on the three-month high seen in December, rising to $68.61/bl on Friday 3 January. The strong possibility of the signing of a phase one trade deal between China and the US has helped push prices up over the festive period despite poor trading volumes, with President Donald Trump currently expected to sign the deal on 15 January. API 2 coal decreased 0.1% to average $56.80/t. Reports from Montel show that coal inventories at ARA terminals dipped towards the end of last year on muted demand to roughly 6.2mn tonnes, quoting the rise in coal to gas switching as a major factor.		EU ETS carbon lost 3.8% to average €25.25/t as prices continued to suffer on low trading volumes after the festive period. Prices began the new year trading at €24.59/t, lower than at the end of 2019. Austria announced its goals to become carbon neutral by 2040 this week, citing the need to induce a carbon price on all CO2 emissions. This will include introducing a domestic carbon price for non-EU ETS sectors and targeting the transport sector – largely air travel with high climate levies.
Wholesale price snapshot