Energy Wholesale Market Review, 7 June 2019

Baseload electricity

• Day-ahead power rose 10.3% week-on-week to £39.3/MWh, driven by higher gas prices and relatively low wind output.
• Month-ahead power slipped 1.0%, ending the week at £39.0/MWh.

• Annual October 19 power was down 1.3% week-on-week at £51.7/MWh.
• The contract is 3.7% lower than the same time last month (£53.7/MWh), but 3.8% higher than the same time last year (£49.9/MWh).

Forward curve comparison

Annual October Contract

Peak electricity

• Day-ahead peak power rose 11.3% to £43.0/MWh, £3.7/MWh above its baseload counterpart.
• Day-ahead peak power is 28.9% lower than the same time last year when it was £60.5/MWh.
• July 19 peak power slipped 1.6% to end the week at £42.7/MWh.

• Annual October 19 peak power was down 1.4% to end the week at £57.5/MWh, £5.8/MWh above its baseload power counterpart.
• The contract is 3.3% below its value this time last month (£59.5/MWh), but 3.0% below the same time last year when it was £55.9/MWh.

Forward curve comparison

Annual October contract

Seasonal power prices

Seasonal baseload power contracts

Seasonal baseload power curve

• All seasonal power contracts moved lower, falling 1.0% on average.
• Winter 19 power declined 1.4% to £55.8/MWh at the end of the week, having dropped to a two-month low below £55.0/MWh on 5 June.

• Seasonal peak power contracts slipped 0.8% on average, with only summer 21 unchanged at £51.2/MWh.
• Winter 19 peak power dropped 1.7% to £62.7/MWh.

Commodity price movements

Oil and Coal 

Carbon

• • Brent crude oil fell 9.7% to average $61.6/bl.
  • News in the middle of the week of an unexpected rise in US crude stockpiles at the end of May also provided bearish momentum to Brent crude oil prices, pushing prices below $60/bl on 5 June, the lowest since January. US crude stocks rose by 22mn barrels at the end of May, the biggest increase since 1990.
  • Oil prices were also pressured by news that US crude production hit a record 12.4mn bpd at the end of May, an increase of 1.63mn bpd y-o-y.
  • API 2 coal prices fell again this week, down 2.9% to average $64.2/t. Prices dropped to $63.3/t, a fresh two-year low.
  • European thermal coal imports are predicted to decline by 16% this year from 95mt in 2018, following cheaper gas prices, higher carbon prices and lower growth in power generation.

• EU ETS carbon prices reversed recent gains this week, dropping 4.5% to average €24.2/t.
• Prices fell following year-to-date record higher auction volumes following the start of EUA volumes from Iceland, Liechtenstein and Norway. These auctions are back-dated with EUAs from 2013, meaning accumulated volumes between 2013-19 will be auctions for the remainder of this year and into 2020, adding 0.3mn EUAs to each EU common auction.
• Weak demand for EUAs is expected to continue as warmer temperatures drive power demand lower, pushing coal-fired power generation out of the generation mix as gas prices remain at record lows across Europe.

Wholesale price snapshot