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Energy Wholesale Market Review, 7 December 2018

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This week, the majority of wholesale power and gas prices fell, whilst commodities moved in the opposite direction. All gas contracts moved lower, with near-term contracts pressured by high LNG send-out and further arrivals of LNG cargoes. Week-on-week day-ahead gas lost 3.7% to 60.3p/th. Seasonal gas contracts decreased 0.7% on average with the biggest movements seen on the front season contracts. Summer 19 gas slipped 1.9% to 54.7p/th and winter 19 gas was 1.3% lower at 63.1p/th. Day-ahead power rose 6.9% to end the week at £64.7/MWh. High levels of wind generation weighed on the day-ahead contract for most of the week but forecasts of a significant drop in wind output on Monday saw the day-ahead price jump significantly on Friday. Most seasonal baseload power contracts decreased week-on-week. Summer 19 power lost 1.7% to £55.3/MWh and the winter 19 contract slipped 1.0% to £61.3/MWh. Brent crude oil prices increased 1.7% to average $61.3/bl last week, beginning to reverse recent losses. On Friday, OPEC and non-OPEC members agreed to cut oil production by 1.2mn bl/d from 2019. OPEC members will cut production by 800,000 bl/d, whilst the remaining 400,000 bl/d will be met by non-OPEC nations such as Russia. API 2 coal prices gained 2.0% to average $86.3/t, supported by increased European demand with the recovery of water levels on the Rhine river. EU ETS carbon prices lifted just 0.7% to average €20.0/t.

Baseload electricity
Day-ahead power rose 6.9% to £64.7/MWh. January 19 power dropped 6.0% to £62.0/MWh and February 19 power lost 5.8% to £62.2/MWh.		Annual April 19 power decreased 1.3% to £58.3/MWh. The contract is 0.8% below the same time last month when it was £58.7/MWh.
Forward curve comparison		Annual April Contract

Peak electricity
Day-ahead peak power jumped 11.8% week-on-week to £73.3/MWh. This was £8.6/MWh above its baseload counterpart. Month-ahead peak power went down 4.8% to end the week at £69.7/MWh, £6.7/MWh above its baseload counterpart.		Week-on-week, annual April 19 peak power went down 1.6% to £63.8/MWh. The contract was £5.6/MWh above its baseload power counterpart. The contract was 1.0% below its price last month (£64.5/MWh) and 31.0% higher than its value last year (£48.7/MWh).
Forward curve comparison		Annual April Contract

Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
All seasonal baseload power contracts decreased week-on-week. Summer 19 power fell 1.7% to £55.3/MWh and the winter 19 contract slipped 1.0% to £61.3/MWh.		All seasonal peak power contracts decreased this week, down 1.0% on average. Prices followed their gas counterparts, with seasonal gas contracts 0.7% lower on average.

Commodity price movements
Oil and Coal		Carbon
The weekly average Brent crude oil price increased 1.7% to average $61.3/bl. On Friday, OPEC and non-OPEC members agreed to cut oil production by 1.2mn bl/d from 2019. OPEC members will cut production by 800,000 bl/d, whilst the remaining 400,000 bl/d will be met by non-OPEC nations such as Russia. API 2 coal prices gained 2.0% to average $86.3/t, supported by increased European demand with the recovery of water levels on the Rhine river.		EU ETS carbon prices lifted 0.7% to average €20.0/t. Last week, the EU Commission announced that Poland will auction an additional 55.8mn EUAs in 2019 after it had not allocated 113mn allowances between 2013-17. This announcement weighed on carbon prices, which dropped as low as €18.0/t on 6 December.

Wholesale price snapshot