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Energy Wholesale Market Review, 9 April 2020

Headlines

Most power and gas contracts rose this week despite no change to lockdown measures announced in the UK. Day-ahead gas fell 3.4% to 15.45p/th on expectation of high temperatures and lowered demand over the Easter bank holiday. Day-ahead power opposed its day-ahead gas counterpart and rose 53.2% to £28.35/MWh. Recovering from an all-time low last week, the power contract rose on expectations of slightly lower wind generation next week. May 20 gas was up 3.3% at 16.70p/th, and June 20 gas increased 3.2% to 17.53p/th. All seasonal gas contracts boosted this week, up by 3.5% on average, while both winter 20 and summer 21 gas increased 3.3% and 5.0% to 33.73p/th and 30.70p/th, respectively. All seasonal power contracts climbed this week, up on average by 5.3%, as winter 20 and summer 21 5.9% and 8.0% to £41.43/MWh and £37.80/MWh, respectively. Brent crude oil gained 26.4% to average $33.16/bl this week, continuing momentum seen from the previous week, as the market looks tentatively to the next OPEC meeting, where a decision on possible cuts to oil supply could make or break the near-term future of oil supply. EU ETS carbon prices saw further recovery this week, mirroring gains seen in the oil market as the price of carbon rose 17.5% to average €20.37/t. API 2 coal followed oil and increased this week, rising 1.1% to average $55.49/t, as the effect of lowered demand begins to take effect on the coal market.

Baseload electricity
Day-ahead power rose 53.2% to £28.35/MWh, recovering from an all-time low last week as lower wind generation helped to lift prices. May 20 power climbed 8.6% to £26.60/MWh and June 20 power increased 8.1% to £28.10/MWh.		Q320 power moved 6.9% higher to £31.00/MWh. The Annual October 20 contract rose 6.9% to £39.62/MWh, 26.0% lower than the same time last year (£53.53/MWh).
Forward curve comparison		Annual October Contract
Peak electricity
Day-ahead peak power was down 6.5% to £28.00/MWh following continued lower demand in peak hours of the day. May 20 peak power gained 5.3% to £29.36/MWh, and June 20 peak power increased 5.7% to £31.29/MWh.		The Annual October 20 peak power lost 7.1% to 44.98/MWh. This is 24.9% lower than the same time last year (59.88/MWh).
Forward curve comparison		Annual October contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
Seasonal power contracts boosted this week, up on average by 5.5%. Winter 20 and summer 21 expanded 5.9% and 8.0% respectively, rising to £41.43/MWh and £37.80/MWh.		Most seasonal peak power contracts boosted this week, up £6.2% on average. winter 20 and summer 21 peak power increased 5.8% and 8.5% respectively, falling to £47.81/MWh and £42.14/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude oil gained 26.4% to average $33.16/bl this week, continuing momentum seen from the previous week, as the market. looks tentatively to the next OPEC meeting, where a decision on possible cuts to oil supply could make or break the near-term future of oil supply. Prices continued to rise throughout the week on increasing optimism that Russia and Saudi Arabia will resolve their current oil price dispute that has seen prices fall under $23/bl in recent weeks. The cuts to oil supply could be by as much as 10-15mn bpd. This cut may not be enough, with some forecasts projecting that oil demand could drop by as much as 15-20% (15-20mn bpd) by the end of April, with these cuts still leaving a significant oversupply of the commodity in the market.		API 2 coal followed oil and increased this week, rising 1.1% to average $55.49/t, despite reduced demand for the commodity. Record-low LNG prices have not supported coal prices; Japan and South Korea (two of the world’s largest importers) will like look buy less coal in coming weeks as a result of cheap LNG. EU ETS carbon prices saw further recovery this week, mirroring gains seen in the oil market as the price of carbon rose 17.5% to average €20.37/t. Prices are still lower than at the same time a year ago, where carbon prices averaged €25.36/t.
Wholesale price snapshot