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Energy Wholesale Market Review, 4 October 2019

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The majority of wholesale power and gas contracts fell, following a decline in Brent crude oil and EU ETS carbon prices. Day-ahead power and gas contracts were the exception, rising 6.8% and 19.6% to £42.7/MWh and 32.0p/th respectively. Forecasts of cooler temperatures offset predictions of higher wind generation next week. November and December 19 power dropped 4.6% and 3.6% to £49.5/MWh and £52.3/MWh, respectively. All seasonal power contracts also declined, lowering 4.1% on average, following their gas counterparts lower. A weekly decline in EU ETS carbon pressured power prices, with concerns of a no-deal Brexit causing carbon to fall to a fresh six-month low of €23.3/t on 4 October. Both November and December 19 gas contracts moved lower, down 4.7% and 3.0% to 43.0p/th and 48.6p/th respectively. Seasonal gas contracts went down 3.9% on average, following a decline in Brent crude oil, which fell 6.3% to $59.1/bl. Within-day day oil prices approached a two-month low, dropping to $57.7/bl on 3 October, as Saudi Arabian oil production returned to full output. API 2 coal was also lower, falling 2.8% to $65.7/t due to weaker demand and high coal stocks.

Baseload electricity
Day-ahead power rose 6.8% to £42.7/MWh, following its gas counterpart higher. Month-ahead power fell 4.6% to £49.5/MWh and December 19 power dropped 3.6% to £52.3/MWh.		Q120 power decreased 4.0% to £54.5/MWh. The annual April 20 power contract dropped 2.7% to end the week at £50.3/MWh. This is down 13.2% lower than the same time last year (£57.9/MWh).
Forward curve comparison		Annual October Contract
Peak electricity
Day-ahead peak power lifted 0.8% to £46.9/MWh, £4.2/MWh above its baseload counterpart. November 19 peak power lost 4.8% to £56.7/MWh. December 19 peak power lowered 2.8% to £58.7/MWh.		Annual April 20 peak power was 5.3% lower at £55.9/MWh, £5.6/MWh above its baseload power. The contract is 3.9% above its value this time last month (£56.0/MWh), but 11.4% below the same time last year when it was £63.1/MWh.
Forward curve comparison		Annual October contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
All seasonal baseload power contracts fell, dropping 4.1% on average. Summer 20 power declined 5.8% to £46.7/MWh, while winter 20 lost 4.4% to £53.8/MWh.		Seasonal peak power contracts were 3.9% lower on average. Summer 20 peak power declined 5.7% to £50.8/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude oil fell 6.3% to average $59.1/bl. Within-day day oil prices approached a two-month low on 3 October, dropping to $57.7/bl. Oil prices were pressured by news that Saudi Arabian production recovered to full output (11.3mn bpd) following last month’s drone attacks. API 2 coal prices were down 2.8% to $65.7/t. Coal dropped as low as $64.8/t on 3 October, a near one-month low. Weaker demand and high coal stocks at ARA terminals pressured prices, while higher wind generation in Germany last week pushed coal generation out of the generation mix.		EU ETS carbon fell 4.9% to average €24.3/t. Prices dropped to a fresh six-month low of €23.3/t on 4 October, pressured by fears of a no-deal Brexit, and the likelihood that unauctioned EUAs will flood the market. Concerns of recessions in Germany and the UK also drove prices lower, impacting longer-term EUA buying. These concerns combined with higher wind generation on the continent last week, resulted in lower demand for EUAs at auctions.
Wholesale price snaphot