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

Baseload electricity Forward curve comparison 9 April 2020

Annual October Contract

Baseload electricity Annual April contract 9 April 2020

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

Peak electricity Forward curve comparison 9 April 2020

Annual October contract

Peak electricity Annual April contract 9 April 2020

Seasonal power prices

Seasonal baseload power contracts

Seasonal power prices Seasonal baseload power contracts 9 April 2020

Seasonal baseload power curve

Seasonal power prices Seasonal baseload power curve 9 April 2020

  • 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

Commodity price movements Oil and coal 9 April 2020

Carbon

Commodity price movements Carbon 9 April 2020

  • 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

Wholesale price snapshot 9 April 2020

Posted by TEAM on 9 April 2020
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