Energy Wholesale Market Review, 5 November 2021

Headlines

It was a relatively mixed week again for gas and power pricing fundamentals this week, with the most pronounced upwards trends seen on near-term contracts, with seasonal contracts generally easing slightly. In support of this, day-ahead gas rose 9.1% to 180.00p/th, rebounding against losses observed from the week prior. Gas prices this week primarily benefitted from select periods of increased heating and gas-for-power demand. Day-ahead power rose 30.5% to £171.00/MWh, drawing on gains seen in near-term gas contracts, along with periods of lower wind outturn. December 21 gas was up 7.0% at 192.68p/th, and January 22 gas increased 5.2% to 195.31p/th. Most seasonal gas contracts declined last week, down by 4.4% on average, while both summer 22 and winter 22 gas dropped 1.5% and 1.7% respectively, subsiding to 105.95p/th and 108.69p/th. Most seasonal power contracts declined this week, down on average by 0.6%, as summer 22 power decreased 1.2% to £106.00/MWh, while winter 22 fell 1.6% to £108.25/MWh.

Baseload electricity
  • Day-ahead power rose 30.5% to £171/MWh, following notable gains made in short-term gas contracts and select periods of low wind outturn.
  • December 21 power climbed 1.1% at £183.96/MWh and January 22 power decreased 0.5% to £208.85/MWh.
  • Q122 power moved 1.4% higher to £182.5/MWh.
  • The annual April 22 contract lost 1.4% to £107.13/MWh, 131.7% higher than the same time last year (£46.23/MWh).
Forward Curve Comparison

 

Annual April Contract

Peak electricity
  • Day-ahead peak power was up 18.2% to £188.00/MWh, following baseload power higher.
  • December 21 peak power declined 18.9% at £223/MWh, and January 22 peak power increased 13.1% to £274.66/MWh.
  • The annual April 22 peak power rose 6.6% to £125.2/MWh
  • This is 139.3% higher than the same time last year (52.31/MWh).

Forward curve comparison

 

Annual April contract

 

Seasonal power prices

Seasonal baseload power contracts

 

Seasonal baseload power curve

 

  • Most seasonal power contracts declined this week, down on average by 0.6%.
  • Summer 22 power decreased 1.2% to £106.00/MWh, while winter 22 fell 1.6% to £108.25/MWh.
  • The majority of seasonal peak power contracts rose this week, up 7.3% on average.
  • Summer 22 gas increased 2.2% to £117.50/MWh, while winter 22 peak power dropped 13.1% to £132.89/MWh.
Commodity price movements

Oil and Coal

 

Carbon

  • Brent crude prices averaged $83.20/bl last week, down 2.1% on the previous week’s average of $84.99/bl.
  • Primarily, the outlook for Brent crude prices remains consistent with recent trends, buoyed by the continuation of tighter market fundamentals.
  • Prices continue to gain support from OPEC+ recent decision to hold firm on output levels for the remainder of 2021, despite wider market pressures to increase supply to ease the tight market conditions.
  • Last week however, surplus crude volumes in the US sent bearish signals to the market.
  • EU ETS prices saw gains last week, up 0.9% to average €59.61/t, while UK ETS prices dropped 4.8% to average £53.07/t.
  • UK ETS carbon prices remain volatile at the moment, with the relative immaturity of the market, seeing significant swings in price over the last fortnight.
  • Recovering wind and renewable generation of late has seen lowering demand for fossil fuel generation to meet higher demand levels, weighing on prices as a result.
Wholesale price snapshot 

 

Posted by TEAM on 5 November 2021
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