Energy Wholesale Market Review, 4 October 2019

Headlines

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

Baseload electricity Forward curve comparison 4 October 2019

Annual October Contract

Baseload electricity Annual April contract 4 October 2019

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

Peak electricity Forward curve comparison 4 October 2019

Annual October contract

Peak electricity Annual April contract 4 October 2019

Seasonal power prices

Seasonal baseload power contracts

Seasonal power prices Seasonal baseload power contracts 4 October 2019

Seasonal baseload power curve

Seasonal power prices Seasonal baseload power curve 4 October 2019

  • 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

Commodity price movements Oil and Coal 4 October 2019

Carbon

Commodity price movements Carbon 4 October 2019

  • 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

Wholesale price snapshot 4 October 2019

Posted by TEAM on 7 October 2019
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