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Energy Wholesale Market Review


Energy Wholesale Market Review Week Ending 26th July 2019

This week, nearly all power and gas contracts dropped week-on-week, with only day-ahead power rising as record breaking temperatures increased cooling demand. Warmer temperatures also supported API 2 coal prices to a three-month high, which in turn saw higher demand for EUAs and lifted EU ETS carbon prices to a 13-year high just below €30/t. Support for EU ETS carbon prices has continued as August approaches, when auction volumes are due to halve to 33mn EUAs. Oil prices on the other hand were down slightly week-on-week, as slowing economic growth is expected to dampen demand for oil for the remainder of 2019. All gas contracts fell further, day-ahead gas was down 5.7% week-on-week to 27.9p/th, the lowest since 5 July. The gas system has remained oversupplied despite an unplanned outage at Langeled which resulted in flows dropping to zero. The end of this week’s heatwave on Friday also pressured prices as cooling demand dropped and there was therefore less gas for power demand as CCGT generation lowered. The day-ahead power contract was up 3.3% to end the week at £41.0/MWh, an increase of 13.6% from the same time last month (£36.1/MWh). Prices were supported by this week’s increase in cooling demand. On average, seasonal baseload power contracts were down 1.0% week-on-week, mirroring their gas counterparts. Winter 19 power dropped 2.6% to £56.4/MWh, up 2.3% from the last month (£52.4/MWh).

Energy Wholesale Market Review Week Ending 26th July 2019


Energy Wholesale Market Review Week Ending 19th July 2019

All power and gas contracts fell, reversing the previous week’s gains. Gas contracts were down following the end of unplanned outages, an increase in production from UKCS and a decline in Brent crude oil prices. Day-ahead gas was down 14.0% to 29.6p/th. The contract started the week at a three-month high of 38.3p/th, as the gas system was undersupplied following an unplanned outage at Aasta Hansteen and a rise in gas for power demand. On average seasonal contracts were 2.8% lower week-on-week, following a decline in Brent crude oil prices. Winter 19 gas dropped 2.6%, ending the week at 53.1p/th, this is 9.8% lower than the same time last year (58.8p/th). The fall in gas prices has pushed power prices lower, which found further pressure from higher wind generation towards the end of the week. The day-ahead contract reversed the previous week’s gains, dropping 14.8% to end the week at £39.7/MWh, a two-week low. On average, seasonal baseload power contracts were down 3.3% week-on-week, mirroring their gas counterparts. Winter 19 power dropped 2.9% to £58.0/MWh. Brent crude oil slipped 0.9% to average $65.1/bl. Prices dropped below $61.5/bl on 18 July, a one month low. API 2 coal prices lifted 0.5% to average $68.6/t, with prices reaching $69.8/t on 19 July, the highest since 17 May. EU ETS carbon prices averaged €28.6/t, up 4.4%. Prices hit a fresh 11-year high of €29.5/t on 15 July. However, prices later dropped back below €28.0/bl, with some market participants labelling the retreat in prices as a “short-term correction.”

Energy Wholesale Market Review Week Ending 19th July 2019


Energy Wholesale Market Review Week Ending 12th July 2019

All baseload power and gas contracts rose this week. Wholesale prices followed a recovery in EU ETS carbon, Brent crude oil and API 2 coal, with the former setting a fresh 11-year high. Prices were further supported by an undersupplied gas system following unplanned outages in Norway, while weaker wind generation led to an increase in gas for power demand. The day-ahead contract was up 14.6% to end the week at £46.6/MWh, the highest since 24 June. On average, seasonal baseload power contracts were up 7.6% week-on-week, mirroring their gas counterparts. Winter 19 power increased 10.7% to £59.7/MWh, the highest since the end of April. All gas contracts rose as the gas system was undersupplied for much of the week due to unplanned outages at Nyhamna and Langeled reducing flows from Norway, whilst planned maintenance at Troll saw lower than expected flows at times. Day-ahead gas was up 25.8% week-on-week to 34.4p/th, having peaked at 35.0p/th on 11 July. On average seasonal contracts were 8.9% higher week-on-week, supported by a recovery in Brent crude oil prices. Brent crude oil rose 2.0% to average $65.7/bl. Prices peaked at $67.6/bl on 11 July, the highest since 30 May. API 2 coal prices soared 5.1% to average $68.2/t, reaching a near nine-week high of $69.1/t on 11 July. EU ETS carbon prices were up 3.2% to average €27.4/t, going above €28/t on 10 July for the first time since April 2008.

Energy Wholesale Market Review Week Ending 12th July 2019


Energy Wholesale Market Review Week Ending 5th July 2019

This week, the majority of baseload power and gas contracts moved lower. However, near-term contracts including day-ahead and month-ahead gas and power contracts rose from last week, with tighter gas supplies and lower wind generation the main drivers. The day-ahead contract was up 12.6% to end the week at £40.7/MWh, a two-week high, while day-ahead gas was up 6.8% to end the week at 27.4p/th. Seasonal gas contracts were pressured by a fall in Brent crude oil prices, which declined despite news that OPEC would extend production cuts until March 2020. Concerns of weaker economic growth continue to dampen oil demand, and the market views OPEC’s decision as inadequate to balance oversupply. On average seasonal contracts were 1.5% lower week-on-week, pressured by a decline in oil prices. Winter 19 gas dropped 2.8% lower, ending the week at 48.4p/th. The fall in seasonal gas contracts fed through into seasonal baseload power contracts, which were also down 1.5% week-on-week. Winter 19 power fell 2.2% to £54.-/MWh, slightly lower than the same time year (£57.1/MWh). Brent crude oil fell for the first time in five weeks, down 2.0% to average $64.4/bl. API 2 coal prices lifted 0.8% to average $64.9/t, ending the week at a six-week high of $67.0/t following a pickup in coal demand from India due to the arrival of a monsoon. EU ETS carbon prices were unchanged, averaging €26.6/t and ended the week below €26.0/t, a two-week low.

Energy Wholesale Market Review Week Ending 5th July 2019

Written By Graham Paul

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