Energy Wholesale Market Review, 31 January 2020

Headlines

All power and gas contracts fell this week with the domestic market reflecting the current bearish global markets. Day-ahead gas fell 9.7% to 24.55p/th to follow oil and LNG prices (which hit a 10-year low this week) lower, as an influx in LNG send-out ensured the market was well supplied. Day-ahead power fell 11.0% to £31.50/MWh, with consistently strong wind generation this week pressuring prices. February 20 gas was down 12.1% at 24.03p/th, and March 20 gas decreased 9.9% to 23.66p/th. All seasonal gas contracts declined this week, down by 7.3% on average, while summer 20 and winter 20 gas dropped 5.9% and 6.6% respectively, subsiding to 24.43p/th and 35.04p/th. All seasonal power contracts declined this week, down on average by 4.5%, as summer 20 power decreased 3.1% to £34.80/MWh, while winter 20 fell 3.3% to £42.70/MWh. Brent crude oil fell by 7.3% to $58.91/bl as investors fear the future of global oil consumption on lack of movement due to the coronavirus. EU ETS carbon slipped by 3.8% to €24.03/t amid the exit of the UK from the European Union, whilst API 2 coal was relatively unchanged at $60.50/t.

Baseload electricity
  • Day-ahead power fell 11.0% to £31.50/MWh, as consistently high wind generation weighed on prices.
  • February 20 power slipped 8.1% to £34.00/MWh and March 20 power decreased 5.0% to £34.20/MWh.
  • Q220 power moved 3.3% lower to £34.67/MWh.
  • The Annual April 20 contract lost 3.2% to £38.75/MWh, 27.2% lower than the same time last year (£53.26/MWh).

Forward curve comparison

Baseload electricity Forward curve comparison 31 January 2020

Annual October Contract

Baseload electricity Annual April contract 31 January 2020

Peak electricity
  • Day-ahead peak power was down 7.1% to £37.15/MWh, following its baseload counterpart lower.
  • February 20 peak power declined 5.5% to £39.75/MWh, and March 20 peak power decreased 4.9% to £37.95/MWh.
  • The Annual April 20 peak power lost 2.9% to 44.08/MWh.
  • This is 26.2% lower than the same time last year (59.71/MWh).

Forward curve comparison

Peak electricity Forward curve comparison 31 January 2020

Annual October contract

Peak electricity Annual April contract 31 January 2020

Seasonal power prices

Seasonal baseload power contracts

Seasonal power prices Seasonal baseload power contracts 31 January 2020

Seasonal baseload power curve

Seasonal power prices Seasonal baseload power curve 31 January 2020

  • All seasonal power contracts declined this week, down on average by 4.5%.
  • Summer 20 power decreased 3.1% to £34.80/MWh, while winter 20 fell 3.3% to £42.70/MWh.
  • All seasonal peak power contracts declined this week, down £3.7% on average.
  • Both summer 20 and winter 20 peak power dropped 2.9%, falling to £38.60/MWh and £49.55/MWh, respectively.
Commodity price movements

Oil and Coal

Commodity price movements Oil and coal 31 January 2020

Carbon

Commodity price movements Carbon 31 January 2020

  • Brent crude oil fell by 7.3% to average $58.91/bl, as prices were generally more stable this week, with the EIA reporting lower than expected US crude inventories. However, prices fell to a fresh three-month low on Friday of $58.34/bl as the World Health Organisation (WHO) announced the coronavirus to be a global health emergency.
  • With an estimated 10,000 people infected worldwide by the virus, travel to and from China has become increasingly restricted, lowering oil consumption. Despite the opposition of the WHO to imposed travel restrictions, investors fear that as the virus continues to spread, a reduction in global travel could significantly reduce global oil consumption. US crude exports to North Asia fell by 27% week-on-week on 31 January.
  • API 2 coal was unchanged this week, averaging only $0.01/t lower at $60.51/t. German company Uniper announced this week that they are closing 2.9GW of coal facilities.
  • EU ETS carbon reversed previous weeks’ gains to fall this week, lowering 3.8% to average €24.03/t, finishing the week at €23.53/t as Britain left the European Union on 31 January. The exit is not expected to impact markets, with any anticipated changes to pricing already factored into the EU ETS prices.
Wholesale price snapshot

Wholesale price snapshot 31 January 2020

Posted by TEAM on 4 February 2020
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