Energy Wholesale Market Review, 7 August 2020

• Day-ahead power fell 1.6% to £34.45/MWh, with high wind generation in the first half of the week.
• September 20 power climbed 15.7% to £39/MWh and October 20 power increased 11.5% to £39.00/MWh.

• Q420 power moved 7.1% higher to £45.00/MWh.
• The annual October 20 contract rose 5.2% to £44.05/MWh, 15.7% lower than the same time last year (£52.28/MWh).

Forward curve comparison

Annual October Contract

• Day-ahead peak power was up 2.0% to £38.5/MWh opposing the movements in its baseload counterpart.
• September 20 peak power gained 13.8% to £42.43/MWh, and October 20 peak power increased 4.9% to £43.2/MWh.

• The annual October 20 peak power contract lost 5.2% to £49.35/MWh.
• This is 16.4% lower than the same time last year (59.05/MWh).

Forward curve comparison

Annual October contract

Seasonal baseload power contracts

Seasonal baseload power curve

• All seasonal power contracts increased this week, up on average by 3.5%.
• Winter 20 and summer 21 power climbed 5.3% and 5.1% respectively, rising to £47.1/MWh and £41/MWh.

• Seasonal peak power contracts were up 3.8% on average, this week.
• Winter 20 and summer 21 peak power increased 5.0% and 5.4% to £53.8/MWh and £44.89/MWh, respectively.

Oil and Coal

Carbon

• Brent crude oil rose 2.0% to average $44.31/bl this week, reaching a near-five month midweek.
• The decision taken by OPEC+ countries in July to begin easing oil production began to take affect this week, with the oil market initially moving lower at the turn of the month.
• The group of oil producing countries has pledged to ease cuts from 9.7mn to 7.7mn bpd.
• Directions reversed midweek, as the US EIA announced a large weekly decline of 8.6mn barrels.
• This announcement saw the Brent price shoot up to a near five-month high of just over $46/bl on 6 August.
• Despite recent price gains the markets will continue to closely follow COVID-19 developments, with countries such as the US experiencing further rises in the number of cases recorded daily.

• API 2 coal prices lifted 0.8% this week to average $59.89/t, with global coal prices boosted by reports of higher Chinese imports.
• EU ETS carbon gained 2.6% to average €26.51/t, supported by weaker auction supply as the EC withdrew EUA’s at the start of August.
• Four EU ETS auctions this week saw an average bid-to-cover ratio (ratio of bids to the number of EUA’s available) of 2.02, which is considerably higher than 1.61 average of the auctions in the previous week.

Wholesale price snapshot