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

Baseload electricity Forward curve comparison 4 June 2021

 

Annual April Contract

Baseload electricity Annual October contract 4 June 2021

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

Peak electricity Forward curve comparison 4 June 2021

Annual April contract

Peak electricity Annual October contract 4 June 2021

Seasonal power prices

Seasonal baseload power contracts

Seasonal power prices Seasonal baseload power contracts 4 June 2021

Seasonal baseload power curve

Seasonal power prices Seasonal baseload power curve 4 June 2021

  • 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

Commodity price movements Oil and Coal 4 June 2021

Carbon

Commodity price movements Carbon (UK and EU ETS) 4 June 2021

  • 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 

Wholesale price snapshot 4 June 2021

Posted by TEAM on 7 June 2021
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