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Energy Wholesale Market Review, 3 May 2019

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The majority of wholesale power and gas contracts were lower week-on-week, as a comfortable gas supply outlook and a fall in Brent crude oil prices pushed contracts lower. Forecasts of temperatures well below seasonal normal levels early in May supported day-ahead gas prices, however, this did not feed into day-ahead power prices which followed EU ETS carbon prices down. Day-ahead power was down 2.6% to end the week at £42.9/MWh, although the contract rose as high as £45.3/MWh in the middle of the week as wind output was low. Seasonal power contracts were 5.7% lower on average. Winter 19 and 20 contracts fell 5.6% and 5.7% to £56.7/MWh and £55.6/MWh respectively. Nearly all gas contracts fell last week, with only day-ahead and July 19 gas rising. Week-on-week, day-ahead gas increased 3.4% to 34.9p/th. Despite the gas system being oversupplied, forecasts of cooler temperatures early in May supported prices throughout the week. All seasonal contracts fell week-on-week, down 6.8% on average, following a fall in oil prices. Brent crude oil prices fell for the first time in eight weeks, dropping 3.7% to average $71.5/bl. Oil prices fell following news that total US crude production ended April at a record high of 12.3mn bpd, causing prices to fall below $70/bl on 2 May, a one-month low. API 2 coal prices fell 3.6% to average $70.1/t, dropping as low as $69.7/t on 2 May, also a one-month low. EU ETS carbon prices reversed recent gains, falling 5.3% to average €25.7/t last week as the compliance period on 30 April ended.

Baseload electricity
Day-ahead power was down 2.6% to end the week at £42.9/MWh, despite forecasts of weaker wind output. June and July 19 power were down 2.9% and 1.1% to £42.8/MWh and £43.2/MWh respectively.		Annual October 19 power decreased 6.1% week-on-week to £52.2/MWh. The contract is 3.0% lower than the same time last month (£53.8/MWh).
Forward curve comparison		Annual April Contract

Peak electricity
Day-ahead peak power fell 7.5% to £43.0/MWh, £0.1/MWh above its baseload counterpart. Day-ahead peak power is 18.9% lower than the same time last year when it was £53.0/MWh. June and July 19 peak power were down 3.7% and 1.0% at £46.8/MWh and £47.4/MWh, respectively.		Annual October 19 peak power dropped 5.5% to end the week at £57.9/MWh, remaining £5.7/MWh above its baseload power counterpart. The contract is 2.3% below its value this time last month (£53.2/MWh).
Forward curve comparison		Annual April contract

Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
Seasonal power contracts were 5.7% lower on average. Winter 19 and 20 contracts fell 5.6% and 5.7% to £56.7/MWh and £55.6/MWh respectively. Winter 19 power is up 9.8% from the same time last year when it was £51.6/MWh.		Seasonal peak power contracts fell 5.2% on average, with winter 19 peak power down 5.0% at £63.8/MWh. Summer and winter 20 peak contracts were 6.2% and 4.5% lower at £52.0/MWh and £63.2/MWh.

Commodity price movements
Oil and Coal		Carbon
Brent crude oil prices fell for the first time in eight weeks, dropping 3.7% to average $71.5/bl. Total US crude production ended April at a record high of 12.3mn bpd, causing prices to fall below $70/bl on 2 May, a one-month low. OPEC oil production in April was expected at a four-year low of 30.2mn bpd, down 90,000 bpd from March. API 2 coal prices fell 3.6% to average $70.1/t, dropping as low as $69.7/t on 2 May, also a one-month low. Coal prices have continued to be pressured by weak demand and high coal stocks at key ARA terminals, which ended April at 6.5mn tonnes. Coal imports into ARA terminals are estimated to have been 50% lower in April than in March, and 20% lower than the same time last year.		EU ETS carbon prices reversed recent gains, falling 5.3% to average €25.7/t last week. Carbon prices dropped below €25/t at the end of the week, as last-minute buying for the 30 April compliance deadline ends, and forecasts of higher wind generation in Germany will push coal-fired power plant out of the generation mix and ease demand for EUAs. Reuters released a revised EU ETS carbon price forecast last week, projecting EUAs to remain between €23.5/t-€28.0/t in the near-term. The new Q219 forecast has been raised €2/t to €25/t, whilst the forecasts for both the H219 and 2019 averages are unchanged at €23/t.

Wholesale price snapshot