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Energy Wholesale Market Review, 6 September 2019

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All wholesale power and gas contracts moved lower week-on-week. Gas contracts fell as the arrival of two LNG tankers early in September resulted in higher LNG send-out and led to medium range storage (MRS) reaching 99% capacity. This offset any reduction in flows following maintenance in Norway. Comfortable gas supplies and higher wind generation also weighed on prices, with both day-ahead power and gas contracts hitting record lows; day-ahead power dropped to £30.6/MWh on 3 September, the lowest since 8 September 2016, and day-ahead gas fell to 19.3p/th on 4 September, a 10-year low. All seasonal gas contracts also declined, dropping 1.6% on average. Winter 19 gas ended the week 4.4% lower at 44.8p/th, having dropped to 44.2p/th in the middle of the week, the lowest since May 2017. The expected resurgence in LNG tanker arrivals this autumn and comfortable gas storage levels have been the key drivers for the decline. All seasonal power contracts also decreased, dropping 2.2% on average. Winter 19 power was down 3.8% at £50.5/MWh, the lowest since April 2018. Brent crude oil was down 1.4%, averaging $59.3/bl. Oil prices fell early in the week, with within-day prices dropping to $57.3/bl on 3 September, a near one-month low, as OPEC production cuts continue and the US-China trade war dents demand forecasts. EU ETS carbon prices were 2.5% lower to average €25.4/t. Uncertainty around Brexit continues to weigh on carbon prices, with a no-deal Brexit expected to result in British emitters flooding the market with EUAs.

Baseload electricity
Day-ahead power was down 5.7% to £37.0/MWh. The contract went as low as £30.6/MWh on 3 September, the lowest since 8 September 2016. October and November 19 power fell 4.1% and 2.5% to £40.9/MWh and £49.4/MWh respectively.		The annual October 19 power contract lost 2.9% to end the week at £48.5/MWh. The contract is 8.0% below the same time last month (£52.7/MWh), and 18.9% lower than the same time last year (£59.8/MWh).
Forward curve comparison		Annual October Contract
Peak electricity
Day-ahead peak power was down 1.2% to £41.5/MWh, £4.5/MWh above its baseload counterpart. October 19 peak power lost 3.8% to £45.8/MWh. November 19 peak power was 2.0% lower at £57.0/MWh.		Annual October 19 peak power was down 3.0% at £54.0/MWh, £5.5/MWh above its baseload power counterpart. The contract is 7.3% below its value this time last month (£58.2/MWh), and 12.4% below the same time last year when it was £66.4/MWh.
Forward curve comparison		Annual October contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
All seasonal power contracts decreased, dropping 2.2% on average. Winter 19 power was down 3.8% at £50.5/MWh, the lowest since April 2018.		Seasonal peak power contracts were 2.5% lower on average. Winter 19 peak power decreased 3.6% to £57.1/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude oil was down 1.4% to $59.3/bl. Oil prices fell early in the week, with within-day prices dropping to $57.3/bl on 3 September, as OPEC production cuts continue and the US-China trade war dents demand forecasts. However, prices were supported on 5 September following an announcement from the US EIA that US crude stocks fell for a third consecutive week, dropping 4.77mn barrels to 423mn barrels, the lowest since October 2018. Prices climbed to $62.3/bl, the highest since 2 August. API 2 coal prices were up 1.0% to average $64.2/t, the first weekly rise since the end of June. Coal stocks at the ARA terminals stood at 5.9mt on 2 September, falling from 6.1mt the week prior.		EU ETS carbon prices were 2.5% lower to average €25.4/t. Within-day carbon prices dropped as low as €24.7/t on 3 September, the lowest since 20 June. Uncertainty around Brexit continues to weigh on carbon prices, with a no-deal Brexit expected to result in British emitters flooding the market with EUAs. Although prices were supported by a two-day auction pause in the middle of the week, prices dropped when auctions resumed on Friday with Germany auctioning 2.8mt of EUAs, while higher auction volumes this week (15.78mt) also pressured carbon prices.
Wholesale price snaphot