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Energy Wholesale Market Review, 4 June 2021

Headlines

Wholesale price movements were mixed this week. Day-ahead gas rose 1.2% to end the week at 62.50p/th, despite ongoing warm temperatures, driven higher towards the end of the week on forecasts of increased gas-for-power demand. August 21 gas lost 4.6% to 61.99p/th, while winter 21 gas boosted 2.8% to 70.29p/th. Day-ahead power went up 1.4% to £74.00/MWh, amid forecasts of low wind output early next week and with higher gas prices. Opposing gas, August 21 power inched up 0.1% to £72.55/MWh, while winter 22 power traded 2.2% lower at £67.00/MWh. In commodities, Brent crude oil gained 3.5% to average $70.91/bl, reaching a fresh two-year high of $71.64/bl on Friday. Prices found support this week from signals of a healthier demand outlook, with OPEC+ members agreeing to go ahead with plans to gradually increase output in July. Additionally, the EIA reported a fall in crude stocks of 5.08mn bbl in the week ending 28 May. EU ETS carbon dropped 2.4% to average €51.37/t, weighed on by warmer temperatures and the second UK ETS auction which outturned at £44.85/t on Wednesday.

Baseload electricity
Day-ahead power rose 1.4% to £74.00/MWh, due to forecasts of low wind output in the coming weeks and a rise in gas prices. July 21 power climbed 0.2% to £73.40/MWh and August 21 power grew 0.1% to £72.55/MWh.		Q321 power was largely unchanged, easing 0.1% to £73.50/MWh. The annual October 21 contract dropped 1.0% to £69.00/MWh, 57.4% higher than the same time last year (£43.83/MWh).
Forward curve comparison		Annual April Contract
Peak electricity
Day-ahead peak power followed its baseload counterpart higher, rising 5.1% to £78.00/MWh. July 21 peak power gained 5.6% to £79.45/MWh, and August 21 peak power increased 2.6% to £78.75/MWh.		Annual October 21 peak power lost 2.0% to £78.90/MWh. This is 59.8% higher than the same time last year (£49.38/MWh).
Forward curve comparison		Annual April contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
All seasonal power contracts declined this week, down on average by 1.7%. Winter 21 power decreased 0.6% to £80.50/MWh, while summer 22 lost 1.5% to £57.50/MWh.		Most seasonal peak power contracts fell this week, down 0.9% on average. Winter 21 peak power dropped 1.1% to £94.00/MWh, while summer 22 peak power increeased 6.8% to £63.80/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude oil gained 3.5% to average $70.91/bl, reaching a fresh two-year high of $71.64/bl on Friday. Prices found support this week from signals of a healthier demand outlook, with OPEC+ members agreeing to go ahead with plans to gradually increase output in July. Additionally, the EIA reported a fall in crude stocks of 5.08mn bbl in the week ending 28 May. Elsewhere, eyes will turn to any potential Iranian nuclear deal, which could see a relaxation on its current oil export ban.		EU ETS carbon dropped 2.4% to average €51.37/t. Its UK counterpart ended the week at £45.57/t, down 5.5% from the previous week. Stronger renewables output at the week’s start dampened carbon prices across both markets, but most notably on the EU ETS. Similarly, stronger performing international commodity markets continued to feed through into carbon markets. Carbon markets will see continued support from more ambitious EU and UK climate targets and vaccination progress, though COVID-19 will continue to bring uncertainty.
Wholesale price snapshot