Energy Wholesale Market Review, 5 June 2020

Headlines

Most power and gas contracts rose this week, potentially marking a change of course for the GB energy market. Day-ahead gas rose 45.7% to 12.75p/th on forecasts of colder weather next week that will spark a rise in gas demand. Day-ahead power rose 20.8% to £29.00/MWh with a higher gas price, and as forecasts of lower wind generation have helped to support the contract. All seasonal gas contracts boosted this week, up by 2.3% on average, with winter 20 and summer 21 gas lifting 3.3% and 2.7% respectively, to 31.8p/th and 29.58p/th. Seasonal power contracts were supported by rising gas prices, up on average by 1.6%. The winter 20 and summer 21 power contracts expanded 1.7% and 2.0% respectively, rising to £42.86/MWh and £38.25/MWh. Brent crude oil prices saw a sharp rise at the beginning of the week as the market speculated on the next OPEC meeting, scheduled to happen on the 9 June. Despite being rocked throughout the week on varying reports on Russia’s potential compliance to production cuts, the Brent crude price was ultimately 12.5% higher than this week, trading at $39.56/bl on average. EU ETS carbon prices rose 1.3% to average €21.68/t this week, as the easing of lockdown measures in Europe is expected to increase consumption levels. API 2 coal prices rose to $53.23/t on short-term supply issues from Russia due to domestic rail disruption within the country.

Baseload electricity
  • Day-ahead power rose 20.8% to end the week at £29.00/MWh, reflecting forecasts for lower wind generation at the start of next week.
  • July 20 power climbed 8.3% at £27.61/MWh and August 20 power increased 8.8% to £28.82/MWh.
  • Q320 power moved 7.3% higher to £29.25/MWh.
  • The annual October 20 contract rose 1.8% to £40.56/MWh, 20.3% lower than the same time last year (£50.87/MWh).

Forward curve comparison

Baseload electricity Forward curve comparison 5 June 2020

Annual October Contract

Baseload electricity Annual October contract 5 June 2020

Peak electricity
  • Day-ahead peak power was up 23.8% to £31.25/MWh, following its baseload counterpart higher.
  • July 20 peak power gained 6.8% at £30.6/MWh, and August 20 peak power increased 5.6% to £31.37/MWh.
  • The annual October 20 peak power contract lost 1.7% to 45.66/MWh.
  • This is 20.3% lower than the same time last year (57.28/MWh).

Forward curve comparison

Peak electricity Forward curve comparison 5 June 2020

Annual October contract

Peak electricity Annual October contract 5 June

Seasonal power prices

Seasonal baseload power contracts

Seasonal power prices Seasonal baseload power contracts 5 June 5 June 2020

Seasonal baseload power curve

Seasonal power prices Seasonal baseload power curve 5 June 5 June 2020

 

  • All seasonal power contracts boosted this week, up on average by 1.6%.
  • Winter 20 and summer 21 expanded 1.7% and 2.0% respectively, rising to £42.86/MWh and £38.25/MWh.
  • All seasonal peak power contracts boosted this week, up 1.4% on average.
  • Winter 20 and summer 21 peak power increased 2.1% and 1.2% respectively, falling to £49.21/MWh and £42.1/MWh.
Commodity price movements

Oil and Coal

Commodity price movements Oil and Coal 5 June 2020

Carbon

Commodity price movements Carbon 5 June 2020

  • Brent crude oil prices saw a sharp rise at the beginning of the week as the market speculated on the next OPEC meeting, scheduled to happen on the 9 June.
  • Despite being rocked throughout the week on varying reports on Russia’s potential compliance to production cuts, the Brent crude price was ultimately 12.5% higher than this week, trading at $39.56/bl on average.
  • Optimism towards the end of last week saw the commodity trade above $40/bl for the first time since early March.
  • The price gains occurred in spite of recent tensions across the US, as the market views rising demand for the commodity to uphold prices in the coming weeks.
  • API 2 coal prices rose to $53.23/t on short-term supply issues from Russia due to domestic rail disruption within the country.
  • EU ETS carbon prices rose 1.3% to average €21.68/t this week despite bearish drivers within the market, although the easing of lockdown restriction in Europe is anticipated to lift consumption levels.
  • Prices hit a 3-month high this week of €22.37/t, the highest since early March.
Wholesale price snapshot

Wholesale price snapshot 5 June 2020

Posted by TEAM on 5 June 2020
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