Energy Wholesale Market Review
Energy Wholesale Market Review Week Ending 27th November 2015
Annual power and gas contracts, along with API 2 coal and Brent crude oil prices, remained near annual lows this week. Annual April 16 power was £39.0/MWh and the corresponding gas contract was 36.8p/th. Day-ahead power was down 13.8% this week to £38.0/MWh and day-ahead gas was 2.1% lower at 36.8p/th, as forecast temperatures climbed across the week. Backwardation exists in seasonal contracts for power and gas, with 2018 prices lower than those for 2017, and 2017 prices below those for 2016. In Europe, French day-ahead power prices jumped 36.5% to £37.9/MWh as a result of strike action by EDF workers. This pushed French prices higher than GB prices for part of the week and resulted in exports from GB to France. The annual April 16 clean spark spread reduced by 6.9% to £4.5/MWh and the equivalent clean dark spread widened by 1.6% to £5.3/MWh. Spreads are closer on day-ahead prices and coal to gas switching is increasingly likely.
Energy Wholesale Market Review Week Ending 27th November 2015.
Energy Wholesale Market Review Week Ending 20th November 2015
Gas and power contracts reversed their downward trends this week, driven by lower temperatures in the shorter-term and mild supply concerns in the longer-term. Day-ahead gas rose 10.1% to 37.6p/th as heating requirements saw regional gas demand jump 18.8%. Day-ahead power followed, surging 23.4% to £44.1/MWh, hitting a seven-month high of £46.00/MWh on Friday afternoon as a result of colder temperatures (-20.1%) and increased power demand (+3.6%). This winter, there is only a £0.9/MWh difference between clean dark and spark spreads on average. The difference is now similar to summer levels, and we can expect to see coal to gas switching under these conditions. Brent crude fell 5.0% this week to average $44.5/bl, the lowest weekly average 2009, amid record high global inventory levels. DECC has also lowered their wholesale gas and power price forecasts to 2035, with gas prices expected to stay low to the end of the decade.
Energy Wholesale Market Review Week Ending 20th November 2015.
Energy Wholesale Market Review Week Ending 13th November 2015
High supply and low demand were the main drivers this week, as power contracts continued to follow commodity prices lower. Falling oil prices and a comfortable supply outlook pulled seasonal gas contracts down to record lows, with summer 16 gas slipping 4.5% to 34.0p/th. Seasonal power contracts followed lower, with summer 16 power trimming 3.3% to £36.8/MWh. Meanwhile, mild temperatures (37.8% above the seasonal norm) and significantly higher wind output (up 191.2% week-on-week) brought day-ahead gas down 4.1% to 34.2p/th, and hit a five-year low in the week. Day-ahead power slid 0.7% to £35.8/MWh, reaching £35.0/MWh on Thursday, the lowest price since July 2014. Brent crude oil fell 5.2% to average $46.8/bl, hitting a two-and-a-half month low of $43.8/bl on Friday with OECD crude inventory levels at a record of almost three billion barrels. API 2 coal prices fell 3.3% to average $46.7/t, and dropped to a fresh low of $45.8/t on Friday.
Energy Wholesale Market Review Week Ending 13th November 2015.
Energy Wholesale Market Review Week Ending 6th November 2015
After falling throughout October, gas and power contracts continued to decline this week. All seasonal gas contracts decreased, with summer 16 gas down 1.5% to 35.7p/th as a strong LNG supply outlook further weighed on prices. Seasonal power contracts followed lower, with summer 16 power trimming 1.0% to £38.1/MWh. Some backwardation can be seen in seasonal gas and power contracts, with further-out contracts now below those in the nearer-term. Spot gas and power prices also fell, as mild temperatures, increased gas supplies and greater wind generation at the week’s end weighed on contracts. Day-ahead gas slipped 5.8% to 35.6p/th, hitting 35.0p/th on Thursday, the lowest price since July 2014. Meanwhile, day-ahead power tumbled 7.7% to £36.0/MWh, the lowest price since January 2015. Brent crude oil lifted 2.7% this week to average $49.3/bl on supply concerns from Libya and Brazil. API 2 coal prices rose 1.0% to average $48.3/t.
Energy Wholesale Market Review Week Ending 6th November 2015.
Written By Graham Paul