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Energy Wholesale Market Review, 31 August 2018

Headlines

All gas and power contracts rose this week, with contracts continuing to hit new highs amid bullish market fundamentals, including fresh 10-year high carbon prices, and rising coal and oil prices. EU ETS carbon prices increased 4.9% to average €20.5/t. Prices hit a fresh 10-year high of €21.8/t on 27 August amid low auction levels caused by the bank holiday on Monday. Day-ahead gas prices gained 4.1% to 69.3p/th. The contract hit a fresh five-month high of 70.4p/th on 30 August. Gas prices rose at the start of the week amid expectations of cooler temperatures in the following days, and were further supported by unplanned outages at gas facilities in Norway. Day-ahead power prices rose 2.7% to end the week up at £67.0/MWh, continuing to find support from rising commodity prices. All seasonal gas and power contracts increased, also hitting new highs this week. Seasonal gas contracts gained 2.0% on average. Winter 18 gas increased 2.2% to 73.1p/th. Seasonal power contracts went up 2.8% on average, with winter 18 power up 2.7% to £70.7/MWh. Brent crude oil prices climbed, lifting 2.5% to average $75.5/bl. Prices started the week up at $76.7/bl, before rising to $77.4/bl on 30 August following news that 2.6mn barrels were withdrawn from US crude stocks. API 2 coal rose 1.8% to average $91.0/t last week. Coal hit a fresh five-year high on 29 August at $93.3/t.

Baseload electricity
All near-term baseload power contracts continued to experience upwards momentum this week. Day-ahead power rose 2.7% week-on-week to £67.0/MWh. The contract hit a fresh five-month high of £68.9/MWh. September and October 18 power gained 4.5% and 3.1% to £67.8/MWh and £67.9/MWh respectively.		The annual October 18 power contract gained 2.8% to £64.4/MWh (up from £62.7/MWh). The contract hit a record high of £64.7/MWh on 30 August. The contract is £7.5/MWh (13.2%) higher than the same period last month, and 47.7% above the same time last year when it was £43.6/MWh.
Forward curve comparison		Annual October Contract

Peak electricity
Day-ahead peak power gained 1.1% week-on-week to £70.5/MWh. This was £3.5/MWh above its baseload counterpart. Month-ahead peak power gained 4.2% to £71.3/MWh, £3.5/MWh above its baseload counterpart.		Week-on-week, annual October 18 peak power increased 2.5% to £69.6/MWh. The contract is £5.2/MWh above its baseload power counterpart. The contract was 12.4% above its price last month (£62.0/MWh).
Forward curve comparison		Annual October Contract

Seasonal power prices
Seasonal baseload power contracts		Seasonal baseload power curve
Week-on-week, seasonal contracts were up 2.8% on average. All seasonal baseload power contracts hit fresh highs this week. On 30 August, winter 18 power peaked at £70.7/MWh and summer 19 rose to £58.8/MWh.		Week-on-week, seasonal peak power contracts increased 1.8% on average. Prices have continued to find support from bullish gas and carbon prices. The winter 18 and summer 19 peak power contracts gained 2.6% and 2.3% to £77.1/MWh and £62.2/MWh respectively.

Commodity price movements
Oil and Coal		Carbon
The weekly average Brent crude oil price rose for the second consecutive week, gaining 2.5% to average $75.3/bl, up from $73.5/bl the previous week. Prices started the week up at $76.7/bl, before rising to $77.4/bl on 30 August following news of a 2.6mn barrel withdrawal in US crude stocks. API 2 coal rose 1.8% to average $91.0/t this week. Prices rose to $93.3/t, a five-year high on 28 August.		EU ETS carbon prices rose for the tenth consecutive week, increasing 4.9% to average €20.5/t, up from €19.5/t the previous week. Prices started the week at €21.8/t on 27 August, supported by low auction volumes on the bank holiday, before easing in the middle of the week to below €21.0/t.

Wholesale price snapshot