Energy Wholesale Market Review, 9 July 2021

Headlines

It was a relatively mixed week for pricing fundamentals across gas and power markets this week, with competing bullish and bearish trends observed. Day-ahead gas fell 7.5% to 90.50p/th, but still remained significantly higher than expected for this time of year in what was quite a volatile week for gas prices. Periods of system oversupply, weaker demand and higher UK domestic production weighed on prices. Alternatively, day-ahead power rose 4.9% to £97.0/MWh, continuing its recent bullish run, supported by weak wind output and reduce nuclear availability. August 21 gas was up 0.5% at 88.81p/th, and September 21 gas increased 1.4% to 90.11p/th. Most seasonal gas contracts boosted this week, up by 0.9% on average. Similarly, the majority of seasonal power contracts rose this week, up on average by 0.2%. Brent crude oil crept up 0.4% to average $75.46/bl this week. Prices reached a fresh two-year high of $77.32/bl on 6 July. Prices this week primarily followed the direction of OPEC+ supply strategy talks. At the week’s start, prices were supported by optimism surrounding the proposed supply strategy for the coming months but later subsided as the week progressed with confidence in these meetings lessened. EU ETS carbon prices fell 2.4% to average €55.11/t. Similarly, UK ETS carbon fell 3.2% to average £45.62/t.

Baseload electricity
  • Day-ahead power rose 4.9% to £97.0/MWh, continuing its recent bullish run, supported by weak wind output and reduce nuclear availability in parts.
  • August 21 power slipped 1.2% at £89.95/MWh and September 21 power decreased 0.4% to £92/MWh.
  • Q421 power moved 1.2% higher to £98.75/MWh.
  • The annual October 21 contract rose 0.7% to £81.63/MWh, 70.1% higher than the same time last year (£48/MWh).

Forward curve comparison

Baseload electricity Forward curve comparison 9 July 2021

Annual April Contract

Baseload electricity Annual October contract 9 July 2021

Peak electricity
  • Day-ahead peak power was up 2.3% to £104.35/MWh, following its baseload counterpart higher.
    August 21 peak power declined 8.5% at £88.89/MWh, and September 21 peak power increased 11.7% to £94.97/MWh.
  • The annual October 21 peak power lost 1.0% to £83.5/MWh.
  • This is 54.1% lower than the same time last year (54.17/MWh).

Forward curve comparison

Peak electricity Forward curve comparison 9 July 2021

Annual April contract

Peak electricity Annual October contract 9 July 2021

Seasonal power prices

Seasonal baseload power contracts

Seasonal power prices Seasonal baseload power contracts 9 July 2021

Seasonal baseload power curve

Seasonal power prices Seasonal baseload power curve 9 July 2021

  • Most seasonal power contracts rose this week, up on average by 0.2%.
  • Winter 21 and summer 22 expanded 0.9% and 0.4% respectively, rising to £98.50/MWh and £64.75/MWh.
  • Most seasonal peak power contracts grew this week, up 0.4% on average.
  • Winter 21 gas increased 1.6% to £105.00/MWh, while summer 22 peak power dropped 0.0% to £62.00/MWh.
Commodity price movements

Oil and Coal

Commodity price movements Oil and Coal 9 July 2021

Carbon

Commodity price movements Carbon (UK and EU ETS) 9 July 2021

  • Brent crude oil crept up 0.4% to average $75.46/bl this week. Prices reached a fresh two-year high of $77.32/bl on 6 July.
  • Prices this week primarily followed the direction of OPEC+ supply strategy talks. At the week’s start, prices were supported by optimism surrounding the proposed supply strategy for the coming months and trying to resolve UAE opposition of output cuts.
  • However, as the week matured – these talks appeared to have broken down and we consequently saw prices fall on consecutive days for the remainder of the week.
  • EU ETS carbon prices fell 2.4% to average €55.11/t. Similarly, UK ETS carbon dropped 3.2% to average £45.62/t.
  • It was a collectively bearish week for carbon markets this week.
  • The primary driver for the downward pressure places on prices was the release of free EUA allocation to industry which persisted into the closing stages of the week.
  • Any sustained losses were capped by generally low wind output on the continent.
Wholesale price snapshot 

Wholesale price snapshot 2 July 2021

Posted by TEAM on 9 July 2021
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