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Energy Wholesale Market Review, 4 March 2022

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This week represented another overwhelmingly bullish week for wholesale gas and power prices, in what continues to be an unprecedented period for the European energy landscape, as conflict between Russia and Ukraine intensifies. Subsequently, day-ahead gas rose 54.9% to 395.00p/th, following the on-going conflict in Ukraine, fueling future gas supply disruption concerns, with Russia currently supplying ~35-40% of European gas. The largely bullish momentum in near-term gas contracts was felt on the domestic power side too, with day-ahead power rising 47.6% to £335.00/MWh. Contracts further along the forward curve soared too, with April 22 gas up 63.2% at 424.14p/th, and May 22 gas increased 80.7% to 404.41p/th – both reaching fresh highs. Similarly, most seasonal gas contracts boosted this week, up by 21.5% on average, while both summer 22 and winter 22 gas increased 55.9% and 33.9% respectively, lifting to 403.30p/th and 356.00p/th, with summer 22 now at a new all-time high. Most seasonal power contracts boosted this week too, up on average by 12.5%, as summer 22 and winter 22 expanded 49.6% and 30.6% respectively, rising to £346.00/MWh and £320.00/MWh.

Baseload electricity
Day-ahead power rose 47.6% to £335/MWh, following landmark gains set in near-term gas contracts, and on expectation of lower wind outturn into the early part of next week. April 22 power climbed 47.7% at £350.00/MWh and May 22 power increased 74.8% to £347.00/MWh.		Q2-22 power moved 49.4% higher to £348.00/MWh. The annual April 22 contract rose 39.8% to £333.00/MWh, 547.7% higher than the same time last year (£51.41/MWh).
Forward Curve Comparison		Annual April Contract
Peak electricity
Day-ahead peak power was up 44.8% to £365.00/MWh, following baseload power higher. April 22 peak power remained unchanged at £170/MWh, and May 22 peak power increased 42.2% to £302.03/MWh.		The annual April 22 peak power rose 72.4% to £335.50/MWh This is 471.2% higher than the same time last year (£58.74/MWh).
Forward curve comparison		Annual April contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
Most seasonal power contracts grew this week, up on average by 12.5%. Summer 22 and winter 22 expanded 49.6% and 30.6% respectively, rising to £346.00/MWh and £320.00/MWh.		Most seasonal peak power contracts saw gains this week, up 38.7% on average. Summer 22 and winter 22 peak power increased 83.9% and 62.5% respectively, rising to £331.00/MWh and £340.00/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude prices recorded further gains this week. Subsequently, Brent crude prices averaged $108.28/bl this week, 9.9% higher than the previous week. This also included a fresh seven-year high on Thursday 3 March at $115.1/bl. The on-going conflict between Russia and Ukraine has prompted a bullish response for Brent crude prices, primarily with the continuation of fresh sanctions imposed on Russia, disrupting commodity exports from the region – in what had been a tight supply market prior to the aforementioned conflict between the two countries. Elsewhere, API 2 coal rose 51.2% to average $196.00/t.		Carbon markets saw strong collective decline from the week previous, with the UK ETS down 12.8% to £74.30/t with the EU ETS down 18.9% to €72.51/t. The volatility in wholesale energy prices has continued to unsettle carbon market. Primarily, bearishness in the previous seven days has come from the unpredictability of current trading sessions, with financial markets in particular being swayed by news surrounding conflict between the Ukraine and Russia. However, looking towards the coming week, expectations of colder weather and lowering wind outturn in the first half of the week may place increased reliance on gas-fired plant to meet the shortfall in renewables output
Wholesale price snapshot