Energy Wholesale Market Review, 5 February 2021

Headlines

It has been a relatively mixed week in terms of pricing fundamentals for both gas and power markets. Most seasonal contracts saw price rises, while short-term and day-ahead contracts declined. Day-ahead gas fell 9.7% to 53.25p/th, with a period of warmer weather at the start of the week coupled with system oversupply. Similarly, day-ahead power lost 13.3% to £62.00/MWh, following strong wind generation at the week’s start. March 21 gas was up 3.5% at 49.20p/th, and April 21 gas decreased 1.9% to 45.81p/th. Most seasonal gas contracts increased this week, up by 1.1% on average. Summer 21 gas dropped 0.9% to 43.17p/th, while winter 21 gas increased 0.9% to 52.13p/th. All seasonal power contracts climbed this week, up on average by 2.7%. Summer 21 and winter 21 power lifted 1.9% and 3.7% respectively, rising to £53.49/MWh and £60.81/MWh. Brent crude oil rose again this week, up 3.3% to $57.76/bl. The market responded well to major crude producers demonstrating they were keeping in line with their output commitments, as a mechanism to combat market oversupply. Similarly, oil prices continue to benefit from extended supply cut pledges from Saudi Arabia for February and March, to combat fears of a lack of demand and market oversupply. EU ETS carbon prices rose 5.9% to average €35.46/t. Impending cold weather forecast across much of Europe and the UK will likely offer some support to prices.

Baseload electricity
  • Day-ahead power fell 13.3% to £62.00/MWh, following increased wind generation, particularly at the week’s start.
  • March 21 power slipped 4.1% to £59.00/MWh and April 21 power increased 8.4% to £55.75/MWh.
  • Q221 power moved 5.6% higher to £56.35/MWh.
  • The annual April 21 contract rose 2.8% to £57.15/MWh, 36.3% higher than the same time last year (£41.93/MWh).

Forward curve comparison

Baseload electricity Forward curve comparison 5 February 2021

Annual April Contract

Baseload electricity Annual April contract 5 February 2021

Peak electricity
  • Day-ahead peak power was down 21.8% to £68.00/MWh, following the baseload contract lower.
  • March 21 peak power declined 8.3% to £62.79/MWh, and April 21 peak power decreased 0.7% to £59.93/MWh.
  • The annual April 21 peak power contract lost 0.2% to £62.14/MWh.
  • This is 30.9% lower than the same time last year (47.46/MWh).

Forward curve comparison

Peak electricity Forward curve comparison 5 February 2021

 

Annual April contract

Peak electricity Annual April contract 5 February 2021

 

Seasonal power prices

Seasonal baseload power contracts

Seasonal power prices Seasonal baseload power contracts 5 February 2021

Seasonal baseload power curve

Seasonal power prices Seasonal baseload power curve 5 February 2021

  • All seasonal power contracts rose this week, up on average by 2.7%.
  • Summer 21 and winter 21 power expanded 1.9% and 3.7% respectively, rising to £53.49/MWh and £60.81/MWh.
  • Most seasonal peak power contracts climbed this week, up 1.4% on average.
  • The summer 21 contract dropped 0.4% to £56.29/MWh, while winter 21 peak power increased 0.8% to £67.99/MWh.
Commodity price movements

Oil and Coal

Commodity price movements Oil and Coal 5 February 2021

Carbon

Commodity price movements Carbon 5 February 2021

  • Brent crude oil rose again this week, up 3.3% to $57.76/bl.
  • The resurgence in COVID-19 global case numbers continues to loom over the majority of commodity markets, fuelling market uncertainty and demand concerns. However, Brent crude continues to remain resilient.
  • The market responded well to major crude producers demonstrating they were keeping in line with their output commitments, as a mechanism to combat market oversupply.
  • API 2 coal fell 2.0% from the previous week to average $66.34/t.
  • EU ETS carbon prices grew this week, rising 5.9% to average €35.46/t.
  • Like other commodity markets, high case numbers of COVID-19 across Europe continued to act bearishly on the carbon price. The introduction of increased EUA auction volumes this week pressurised the market, with the market soaking up over 15.1mn EUA’s.
  • Impending cold weather forecast across much of Europe and the UK will likely offer some support to prices, as well as a consequential rise in fossil.
Wholesale price snapshot 

Wholesale price snapshot 5 February 2021

Posted by TEAM on 5 February 2021
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