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Energy Wholesale Market Review, 6 August 2021

Headlines

Retaining their bullish momentum, the majority of gas and power contracts reported gains this week. Day-ahead gas rose 6.9% to 109.00p/th, finding support from lower UKCS production and a drop in Norwegian imports during the week, alongside forecasts of increased gas-for-power demand at the week’s end. Despite reducing mid-week, day-ahead gas prices reached a more-than three-year high on 2 August of 109.00p/th, rising back to this level on Friday. September 21 gas rose 8.8% to 111.15p/th, and October gas traded 7.6% higher at 112.42p/th. All seasonal gas contracts saw price rises this week, up by an average of 8.6%. Following its gas counterpart, day-ahead power went up 4.0% to £105.00/MWh, while also finding support on Friday from forecasts of weaker wind output at the start of next week. September 21 power increased 10.3% to £110.00/MWh and October 21 power elevated 2.8% to £104.50/MWh. Seasonal power contracts averaged an increase of 9.6% this week. Brent crude oil slipped marginally, down 3.2% to average $72.50/bl. Prices were weighed on news of the rising prevalence of the Delta variant in the US and China, and amid news of the potential for fresh travel restrictions across several countries. Carbon prices continued their upwards trajectory this week, with the EU ETS up by 3.6% to average €55.32/t, and the UK ETS boosting 7.5% to average €46.64/t, finding support from a tight European gas market.

Baseload electricity
Day-ahead power went up 4.0% to £105.00/MWh, with forecasts of weakened wind output forecast for early next week lifting prices. September 21 power boosted 10.3% to £110.00/MWh and October 21 power increased 2.8% to £104.50/MWh.		Q421 power traded 10.3% higher to £115.00/MWh. The annual October 21 contract lifted 11.3% to £93.00/MWh, 101.6% higher than the same time last year (£46.13/MWh).
Forward curve comparison		Annual April Contract
Peak electricity
Day-ahead peak power was up 15.3% to £109.00/MWh, taking direction from its baseload counterpart. September 21 peak power rose 4.4% to £106.50/MWh, and October 21 peak power increased 0.1% to £111.60/MWh.		The annual October 21 peak power went up 19.8% to £121.80/MWh. This is 95.1% above than the same time last year (£51.81/MWh).
Forward curve comparison		Annual April contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
This week all seasonal power contracts went up, rising 9.6% on average. Winter 21 and summer 22 power contracts lifted 10.9% and 11.8% respectively, to £112.00/MWh and £74.00/MWh.		All seasonal peak power contracts rose this week, up 21.6% on average. Winter 21 peak power gained 18.6% to £121.80/MWh, while summer 22 peak power increased 21.7% to £80.35/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude oil slipped 3.2% to average $72.50/bl, this week. Rising Covid-19 cases, in particular the prevalence of the Delta variant in the US and China weighed on prices this week, with the potential for fresh travel restrictions being imposed in several countries. At the week’s end, rising tensions between Israel and Iran provided some support to prices. Also providing support, economic projections from UBS showed expectations for Brent crude prices to resume their upwards trajectory, trading between $75 and $80/bl in the second half of 2021.		Carbon prices reported healthy gains this week, with the EU ETS up 3.6% to average €55.32/t. UK ETS carbon boosted 7.5% to average €46.64/t. Carbon prices continue to find support from buoyant commodity markets, but were also supported by a tight European gas market this week.
Wholesale price snapshot