Energy Wholesale Market Review, 30 October 2020

Headlines

All power and gas contracts fell this week, largely weighed upon by lockdown announcements made across GB and Continental Europe which have acted to suppress demand. Day-ahead gas fell 11.6% to 38.00p/th, following a period of milder temperatures correlated with strong renewable generation throughout the week. Similarly, day-ahead power declined, falling 18.3% to £35.75/MWh, with high wind output weighing on prices coupled with lower demand. November 20 gas was down 5.3% at 42.05p/th, and December 20 gas decreased 8.9% to 42.66p/th. All seasonal gas contracts declined this week, down by 5.7% on average – following the wider movements in commodity markets. Summer 21 and winter 21 gas dropped 8.4% and 5.3% respectively, subsiding to 33.77p/th and 42.02p/th respectively. All seasonal power contracts declined this week, down on average by 4.4%, as summer 21 power decreased 6.1% to £42.40/MWh, while winter 21 fell 4.7% to £48.65/MWh. Brent crude oil fell notably this week, seeing a decrease of 6.6% to average $39.57/bl. The Brent crude price suffered this week as a result of recent lockdown announcements as news of a global escalation in covid-19 case numbers emerged, adding to fears within the market of a likely drop-off in demand. EU ETS carbon dropped by a further 3.5% to average €23.60/t for the week.

Baseload electricity
  • Day-ahead power fell 18.3% to £35.75/MWh, following, following strong wind output throughout the week.
  • November 20 power slipped 7.3% to £47.5/MWh and December 20 power decreased 8.6% to £47.75/MWh.
  • Q121 power moved 5.6% lower to £50.5/MWh.
  • The annual April 21 contract lost 5.4% to £45.53/MWh, 5.5% lower than the same time last year (£48.2/MWh).

Forward curve comparison

Baseload electricity Forward curve comparison 30 October 2020

Annual October Contract

Baseload electricity Annual April contract 30 October 2020

Peak electricity
  • Day-ahead peak power was down 6.8% to £48.00/MWh, amid mild temperatures and high renewables output.
  • November 20 peak power declined 3.0% to £56.53/MWh, and December 20 peak power decreased 5.0% to £55.47/MWh.
  • The annual April 21 peak power contract lost 2.7% to £51.34/MWh.
  • This is 6.2% lower than the same time last year (54.72/MWh).

Forward curve comparison

Peak electricity Forward curve comparison 30 October 2020

Annual October contract

Peak electricity Annual April contract 30 October 2020

Seasonal power prices

Seasonal baseload power contracts

Seasonal power prices Seasonal baseload power contracts 30 October 2020

Seasonal baseload power curve

Seasonal power prices Seasonal baseload power curve 30 October 2020

  • All seasonal power contracts declined this week, down on average by 4.4%.
  • Summer 21 power decreased 6.1% to £42.40/MWh, while winter 21 fell 4.7% to £48.65/MWh.
  • All seasonal peak power contracts declined this week, down 2.9% on average.
  • Summer 21 and winter 21 peak power dropped 3.5% and 2.1% respectively, falling to £46.90/MWh and £55.77/MWh.
Commodity price movements

Oil and Coal

Commodity price movements Oil and coal 30 October 2020

Carbon

Commodity price movements Carbon 30 October 2020

  • Brent crude oil fell notably this week, seeing a decrease of 6.6% to average $39.57/bl. In weeks previous, the Brent crude price had remained relatively stable sitting above the $40.00/bl mark.
  • However, news of tighter restrictions rolled out across Europe and the UK combined with increasing case numbers as pre-empted the week prior, has weighed on prices heavily this week.
  • Increased lockdown measures continue to generate concern within the market from a likely drop-off in demand. Similarly, a ramp up in production from Libya late this week had added to a further bearish outlook on prices with concerns over oversupply.
  • API 2 coal similarly declined, falling 3.4% to average $57.45/t for the week.
  • EU ETS prices fell again this week. Prices dropped by a further 3.5% to average €23.60/t for the week.
  • The drop in prices this week was symptomatic of the general sentiment observed across many global commodity markets, as COVID-19 cases begin to climb at an increased pace.
  • An agreed verdict for the carbon market post-Brexit is still yet to be agreed, fuelling further fears within the market about the future of EU ETS trading.
  • The uncertainty surrounding a definitive framework for the market has dampened prices for several weeks, combined with already suppressed prices as a result of wavering demand from the Coronavirus.
Wholesale price snapshot 

Wholesale price snapshot 30 October 2020

 

Posted by TEAM on 2 November 2020
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