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Energy Wholesale Market Review, 7 January 2022

Headlines

This week represented a largely bullish week for gas and power prices, after a period of relative price suppression in previous weeks, driven by milder weather and a healthier gas supply picture. Looking at this week more specifically, day-ahead gas rose 30.3% to 227.00p/th, following periods of colder weather in the week, coupled with higher European gas prices and Russian supply concerns. Day-ahead power rose 30.3% to £215.00/MWh, following strong gains made in near-term gas prices, exacerbated by lower periods of wind generation in the week. February 22 gas was up 24.3% at 236.22p/th, and March 22 gas increased 29.8% to 232.42p/th. All seasonal gas contracts rose this week, up by 20.1% on average. Similar movements were seen across seasonal power contracts, rising on average by 10.8%. Carbon prices saw bullish movements this week, with the UK ETS rising 0.6% to average £75.98/t. Similarly, the EU ETS rose, up 7.1% to €85.23/t. Brent crude prices rebounded this week too, up 3.7% to average $80.55/bl.

Baseload electricity
Day-ahead power rose 30.3% to £215.00/MWh, following strong gains made in near-term gas prices and lower periods of wind generation. February 22 power slipped 9.3% at £276.50/MWh and March 22 power increased 3.9% to £213.00/MWh.		Q2-22 power moved 10.2% lower to £188.50/MWh. The annual April 22 contract rose 11.7% to £192.75/MWh, 281.7% higher than the same time last year (£50.50/MWh).
Forward Curve Comparison		Annual April Contract
Peak electricity
Day-ahead peak power was up 29.7% to £240.00/MWh, following baseload power higher. February 22 peak power declined 8.0% at £430.00/MWh, and March 22 peak power increased 11.2% to £220/MWh.		The annual April 22 peak power rose 17.1% to £216.13/MWh This is 277.7% higher than the same time last year (57.23/MWh).
Forward curve comparison		Annual April contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
All seasonal power contracts rose this week, up on average by 10.8%. Summer 22 and winter 22 expanded 12.4% and 11.1% respectively, rising to £185.50/MWh and £200.00/MWh		Most seasonal peak power contracts experienced losses this week, falling 1.4% on average. Summer 22 and winter 22 peak power increased 24.6% and 11.5% respectively, falling to £198.00/MWh and £234.25/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude prices rebounded this week, up 3.7% to average $80.55/bl. Prices in the this week have reacted positively to news that the Omicron variant is not expected to have as substantial impact on demand recovery in 2022 as originally forecast, softening concern in the market. Similarly, on Thursday 6 January, Saudi Arabia confirmed it will be reducing its selling price of crude oil to Asian markets for February, which is expected to encourage increased trading for the month.		Carbon prices saw bullish movements this week, with the UK ETS rising 0.6% to average £75.98/t. Similarly, the EU ETS rose, up 7.1% to €85.23/t. Both EU and UK ETS markets remained resilient this week, despite much higher wind generation, particularly in the UK. However, recovering near-term gas prices were able to lend support this week, coupled with a current pause on the first EUA auctions of 2022. They are expected to resume next week.
Wholesale price snapshot