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Energy Wholesale Market Review, 9 August 2019

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The majority of wholesale power and gas contracts were lower week-on-week, supported by the end of maintenance at gas fields in the UKCS and Norway, whilst higher wind generation towards the end of the week pressured power prices. Day-ahead power was down 3.9% to end the week at £41.1/MWh, while day-ahead gas dropped 8.2% to end the week at 28.0p/th. However, September and October 19 power contracts followed their gas counterparts up, rising 1.3% and 1.2% to £44.7/MWh and £47.2/MWh, respectively. September and October 19 gas contracts both moved higher, rising 4.8% and 4.2% to 33.5p/th and 37.9p/th, respectively. September 19 gas declined following news of a planned outage at the Easington terminal between 10-24 September, which will reduce availability by 71.2mcm/d. On average, seasonal baseload power and seasonal gas contracts were down 1.5% and 1.8% respectively. Wholesale prices were also pressured by a decline in commodity prices, with Brent crude oil, EU ETS carbon and API 2 coal all down from the previous week. Brent crude oil fell 7.6% to average $59.0/bl. Within-day oil prices dropped to their lowest level since January 2019 this week, falling to $55.9/bl on 7 August. API 2 coal prices fell further, down 3.1% to average $66.0/t. Coal prices dropped to a one-month low of $65.3/t on 8 August. EU ETS carbon prices averaged €28.5/t this week, down 0.7% from the previous week.

Baseload electricity
Day-ahead power was down 3.9% to end the week at £41.1/MWh. Prices fell to a two-month low of £36.0/MWh on 8 August, as higher wind generation was forecast the following day. September and October 19 power rose 1.3% and 1.2% to £44.7/MWh and £47.2/MWh, respectively.		Annual October 19 power decreased 1.8% week-on-week to £52.7/MWh. The contract is 6.1% below the same time last month (£56.2/MWh), and 2.3% lower than the same time last year (£54.0/MWh).
Forward curve comparison		Annual October Contract
Peak electricity
Day-ahead peak power was down 4.3% to £44.0/MWh, £3.0/MWh above its baseload counterpart. Day-ahead peak power is 31.3% lower than the same time last year when it was £64.0/MWh. September and October 19 peak power both increased by 1.1% to £47.8/MWh and £51.9/MWh, respectively.		Annual October 19 peak power was 1.6% lower at £58.2/MWh, £5.5/MWh above its baseload power counterpart. The contract is 5.4% below its value this time last month (£61.5/MWh), and 3.3% below the same time last year when it was £58.9/MWh.
Forward curve comparison		Annual October contract
Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
Seasonal baseload power contracts were down 1.5% on average. Both winter 19 and summer 20 power contracts dropped by 1.8% to £55.7/MWh and £49.8/MWh, respectively.		Most seasonal peak power contracts were down, falling 1.2% on average. Winter 19 peak power decreased 1.6% to £62.2/MWh.
Commodity price movements
Oil and Coal		Carbon
Brent crude oil fell 7.6% to average $59.0/bl. Within-day oil prices dropped to their lowest level since January 2019 this week, falling to $55.9/bl on 7 August. This followed news of an unexpected increase in US crude stockpiles the previous week, which were up 2.4mn barrels according to data from the EIA. Concern of weaker demand has also weighed on prices, and is the driver behind the IEA’s recent downwards revision to forecasts of oil demand growth to its lowest level since 2008, in its latest Oil Market Report (OMR). API 2 coal prices fell further, down 3.1% to average $66.0/t. Coal prices dropped to a one-month low of $65.3/t on 8 August, as demand remained relatively weak amid a rise in wind generation.		EU ETS carbon prices averaged €28.5/t, down 0.7% from the previous week. Forecasts of higher wind generation in Europe over the next two weeks weighed on prices, with conventional generators pushed off the system as a result. Carbon has remained above €27/t since 10 July, with the market supported by auction volumes halving to 33mn EUAs in August. Revised forecasts expect temperatures to be nearer or slightly below seasonal normal levels in the second half of August across Europe, and this will result in lower cooling demand and could therefore weigh on carbon prices further.
Wholesale price snaphot