Energy Wholesale Market Review, 5 April 2019

Baseload electricity

• Day-ahead power rose 5.4% to £44.3/MWh. Earlier in the week the contract fell to a fresh 20-month low of £39.7/MWh.
• May and June 19 power contracts gained 8.3% and 8.9% to £45.0/MWh and £46.0/MWh, respectively.

• Annual October 19 power increased 8.5% week-on-week to £53.8/MWh.
• The contract is 1.1% above the same time last month (£53.3/MWh).

Forward curve comparison

Annual April Contract

Peak electricity

• Day-ahead peak power increased 9.6% to £46.6/MWh, £6.9/MWh above its baseload counterpart.
• Day-ahead peak power is 10.6% lower than the same time last year when it was £52.2/MWh.
• May and June 19 peak power gained 6.7% and 8.8% to £47.9/MWh and £50.5/MWh, respectively.

• Annual October 19 peak power lifted 7.4% to £59.2/MWh, £5.4/MWh above its baseload power counterpart.
• The contract is unchanged from last month, but 20.3% higher than its value last year (£49.2/MWh).

Forward curve comparison

Annual April contract

Seasonal power prices

Seasonal baseload power contracts

Seasonal baseload power curve

• Seasonal power contracts rose 6.3% on average.
• Winter 19 power climbed 8.7% to £58.2/MWh, up 0.5% from the same time last month when it was £58.0/MWh.

• Seasonal peak power contracts rose 5.4% on average.
• The Winter 19 peak contract was up 7.5% at £64.9/MWh.

Commodity price movements

Oil and Coal 

Carbon

• • Brent crude oil prices rose 2.5% to average $69.2/bl.
  • Oil prices found support from news that OPEC production cuts had taken the group’s output to a four-year low in March. Tighter supplies outweighed news this week that US crude production reached a record 12.2mn bpd.
  • Reports of positive outcomes in the previous week’s trade talks between the US and China also boosted sentiment, with the US government saying that negotiations were “candid and constructive”.
  • API 2 coal prices fell 4.3% to average $70.8/t, dropping to $68.0/t on 3 April, a 22-month low.
  • Coal demand in Asia continues to fall, with Chinese coal imports down from 2.0mn tonnes in January to 1.3mn tonnes in March.

• EU ETS carbon prices increased 5.6% to average €22.8/t. Within-day carbon prices peaked at €24.8/t on 4 April, the highest since 24 January.
• Carbon prices were supported this week amid expectations that a no-deal Brexit was increasingly less likely and would keep the UK in the EU ETS until 2021 as part of a transitional period.
• Analysts have speculated that this week’s bullish momentum in carbon prices is unsustainable. With gas prices remaining near two-year lows and NW European gas stocks relatively comfortable, coal-fired power generation will act as a marginal power supply.

Wholesale price snapshot