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Energy Wholesale Market Review, 9 November 2018

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This week, wholesale power and gas prices rose, whilst Brent crude oil and API 2 coal experienced downwards movements. Despite day-ahead gas and power contracts hitting 12 and 14-week lows respectively, prices have been influenced by recovering EU ETS carbon prices and forecasts of below seasonal normal temperatures moving into December. All baseload power contracts along the curve rose this week with day-ahead power up 0.6% to £61.3/MWh. This was despite the contract falling to a 14-week low of £56.9/MWh on 6 November as higher wind generation was expected the following day. Power prices have followed gas prices higher week-on-week, with seasonal power contracts up 2.0% on average. Despite further LNG tankers arriving at UK terminals, day-ahead gas gained 2.2% to end the week at 62.9p/th. Prices had started the week at a 12-week low of 59.8p/th amid warmer temperatures but rose following an unplanned outage at Kollsnes gas plant on 8 November. The weekly average Brent crude oil price fell 4.6% to $72.1/bl, as oil prices dropped to a six-month low of $69.2/bl on 9 November. Recent concerns of a tight market have turned to worries of oversupply in 2019, and pressured prices. API 2 coal prices dropped 4.0% to average $90.3/t, as prices ended the week at $88.5/t, a 12-week low. EU ETS carbon prices went up 11.4% to average €18.2/t. Prices reached $19.9/t on 9 November, with the upcoming Market Stability Reserve in January 2019 expected to provide further support this year.

Baseload electricity
Day-ahead power rose 0.6% to £61.3/MWh. Prices dropped to a 14-week low of £56.9/MWh on 6 November amid higher wind generation forecasts. December 18 and January 19 power rose 2.3% and 2.2% to £63.6/MWh and £65.0/MWh respectively.		Annual April 19 power gained 2.6% to £58.7/MWh, having fallen to an 11-week low of £57.0/MWh on 5 November. The contract is 3.2% below its level last month, when it was £60.7/MWh.
Forward curve comparison		Annual October Contract

Peak electricity
Day-ahead peak power fell 2.2% week-on-week to £65.6/MWh. This was £4.3/MWh above its baseload counterpart. Month-ahead peak power went up 0.5% to end the week at £70.3/MWh, £6.7/MWh above its baseload counterpart.		Week-on-week, annual April 19 peak power went up 1.8% to £64.5/MWh. The contract was £5.8/MWh above its baseload power counterpart. The contract was 3.0% below its price last month (£66.5/MWh) and 28.3% higher than its value last year (£50.3/MWh).
Forward curve comparison		Annual October Contract

Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
Seasonal baseload power contracts increased 2.0% on average. Summer and winter 19 power went up 2.5% and 2.7% to £55.6/MWh and £61.9/MWh respectively.		Most seasonal peak power contracts increased this week, up 2.3% on average. Prices followed their gas counterparts; with seasonal gas contracts 1.2% higher on average.

Commodity price movements
Oil and Coal		Carbon
The weekly average Brent crude oil price fell for a fifth week, dropping 4.6% to average $72.1/bl, down from $75.6/bl the previous week. Oil prices dropped to a six-month low of $69.2/bl on 9 November, the lowest since April as recent concerns of a tight market have turned to worries of oversupply in 2019. This has led to OPEC considering the potential for a return to production cuts, with a technical meeting of officials from OPEC and allies to take place in Abu Dhabi on 10-11 November. API 2 coal prices dropped 4.0% to average $90.3/t, down from $94.1/t the previous week. Prices ended the week at $88.5/t, a 12-week low.		EU ETS carbon prices recovered, surging 11.4% to average €18.2/t. Prices recovered from a four-month low of €15.2/t on 1 November, to reach $19.9/t on 9 November. Prices have made a relatively quick recovery after the recent fall, with the upcoming Market Stability Reserve in January 2019 expected to provide further support in the coming weeks.

Wholesale price snapshot