Energy Wholesale Market Review, 8 July 2022

Headlines

Wholesale gas and power contracts shared collective price rises across all tracked contracts this week. Day-ahead gas rose 38.8% to 222.00p/th, following softer LNG-sendout due to maintenance at Dragon terminal, coupled with the threat of oil and gas strike action in Norway at the week’s start, in addition to select periods of outages across the UKCS. Day-ahead power rose 61.9% to £285.00/MWh, sharing the strong gains made from its equivalent gas contract, coupled with periods of reduced wind output in the week in parallel. Bullish sentiment in near term contracts was also seen further along the forward curve , with August 22 gas up 21.1% at 299.25p/th, while September 22 gas increased 20.4% to 381.24p/th. All seasonal gas contracts boosted this week, up by 28.0% on average, while both winter 22 and summer 23 gas increased 21.3% and 35.9% respectively, lifting to 455.75p/th and 314.95p/th. Like gas, all seasonal power contracts reported week-on-week gains, up on average by 23.1%, as winter 22 and summer 23 lifted 17.1% and 29.3% respectively, to £410.00/MWh and £265.00/MWh.

Baseload electricity
  • Day-ahead power rose 61.9% to £285.00/MWh, following the gains made from its gas counterpart.
  • August 22 power climbed 24.0% to £300.00/MWh and September 22 power increased 18.0% to £360.00/MWh.
  • The annual October 22 contract rose 21.6% to £337.5/MWh, 439.7% higher than the same time last year (£62.53/MWh).
Forward Curve Comparison

 

Annual October Contract

Peak electricity
  • Day-ahead peak power was up 59.5% to £295.00/MWh, following baseload power higher.
  • August 22 peak power gained 26.2% at £315.85/MWh, and September 22 peak power increased 14.2% to £381.1/MWh.
  • The annual October 22 peak power rose 21.4% to £387.88/MWh
  • This is 451.4% higher than the same time last year (70.34/MWh).

Forward curve comparison

 

Annual October contract

 

Seasonal power prices

Seasonal baseload power contracts

 

Seasonal baseload power curve

 

 

  • All seasonal power contracts boosted this week, up on average by 23.1%.
  • Winter 22 and summer 23 gained 17.1% and 29.3% respectively, rising to £410.00/MWh and £265.00/MWh.
  • Like baseload power, all seasonal peak power contracts reported gains this week, up 21.7% on average.
  • Winter 22 and summer 23 peak power increased 18.8% and 26.0% respectively, up to £487.35/MWh and £288.40/MWh.
Commodity price movements
 

Oil and Coal

 

Carbon

  • Brent crude prices fell 7.5% this week to average $106.55/bl.
  • Ongoing concerns surrounding the prospect of a global recession, and the potential impact on future demand growth weighed on prices strongly this week.
  • However, the full extent of losses was capped by the current tight global supply picture, amid lower OPEC output, unrest in Libya, and sanctions on Russia.
  • API 2 coal rose 2.6% to average $259.75/t.
  • EU ETS carbon and UK ETS carbon experienced diverging price movements this week. EU ETS carbon fell 1.5% to average €83.71/t whilst UK ETS carbon rose 1.0% to average £83.78/t.
  • Volatility in the EU ETS carbon market continued this week. The possibility of EU ETS authorities adding surplus allowances into the market to soften price spikes partly facilitated prices falling in the week.
  • UK ETS carbon prices were buoyed by periods of lower wind and renewable output in the week seeing favourable coal spreads and increased cooling demand.
Wholesale price snapshot 

 

Posted by TEAM on 11 July 2022