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Energy Wholesale Market Review, 5 February 2021

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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		Annual April Contract
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		Annual April contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
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		Carbon
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