28 September 2018

Headlines

All power contracts reversed the previous week’s gains, following gas prices lower despite below seasonal normal temperatures expected at the start of next week. Week-on-week, day-ahead gas prices dropped 3.6% to 73.3p/th, but with prices hitting a five-month high of 78.4p/th on 24 September as colder temperatures lead to increased gas demand. Day-ahead power followed its gas counterpart lower, down 4.1% to end the week at £67.1/MWh. Nearly all seasonal gas and power contracts decreased week-on-week, with summer 20 gas and winter 20 power the exceptions. Seasonal gas contracts fell 1.0% on average with winter 18 and summer 19 falling 2.2% and 1.4% to 78.0p/th and 62.8p/th respectively. Seasonal power contracts fell 1.2% on average, with winter 18 power reversing the previous week’s gains and dropping 3.2% to £71.3/MWh. The weekly average Brent crude oil price rose for the sixth consecutive week, gaining 3.1% to average $81.6/bl, up from $79.1/bl the previous week. Oil hit a fresh four-year high at above $82.0/bl on 25 September as the upcoming US sanctions on Iran have supported prices. API 2 coal rose 0.9% to average $97.6/t last week, hitting a five-year high of $98.8/t on 24 September. EU ETS carbon prices experienced a second consecutive weekly decline, dropping 0.2% to average €21.1/t.

Baseload electricity
  • Day-ahead power fell 4.1% to £67.1/MWh.
  • Prices started the week at a fresh five-month high of £72.6/MWh but dropped towards the end of the week.
  • Both October 18 and November 18 power decreased week-on-week, dropping to £70.1/MWh and £73.6/MWh respectively.
  • The annual October 18 power contract fell 2.2% to end the week at £65.7/MWh (down from £67.2/MWh).
  • The contract is £1.3/MWh (2.1%) higher than the same period last month, and 50.7% above the same time last year when it was £22.1/MWh.

Forward curve comparison

Baseload Electricity Forward curve comparison 28 September 2018

Annual October Contract

Baseload Electricity Annual October contract 28 September 2018

 

Peak electricity
  • Day-ahead peak power reversed the previous week’s gains, slipping 0.7% week-on-week to £72.5/MWh. This was £5.4/MWh above its baseload counterpart.
  • Month-ahead peak power went down 2.5% to end the week at £73.5/MWh, £3.4/MWh above its baseload counterpart.
  • Week-on-week, annual October 18 peak power lowered 1.6% to £71.2/MWh. The contract is £5.5/MWh above its baseload power counterpart.
  • The contract was 2.2% above its price last month (£69.6/MWh) and 44.7% higher than its value last year (£49.2/MWh).

Forward curve comparison

Peak Electricity Forward curve comparison 28 September 2018

Annual October Contract

Peak Electricity Annual October contract 28 September 2018

Seasonal power prices

Seasonal baseload power contracts

Seasonal Power Prices Seasonal baseload power contracts 28 September 2018

Seasonal baseload power curve

Seasonal Power Prices Seasonal baseload power curve 28 September 2018

  • Seasonal contracts were down 1.2% on average.
  • Despite ending the week down, winter 18, summer 19 and winter 19 power contracts all hit fresh record highs last week, with winter 18 power peaking at £76.2/MWh on 24 September.
  • All seasonal peak power contracts decreased last week, down 1.5% on average.
  • Prices followed a decrease in gas prices.
Commodity price movements

Oil and Coal

Commodity price movements Oil and Gas 28 September 2018

Carbon

Commodity price movements Carbon 28 September 2018

  • The weekly average Brent crude oil price rose for the sixth consecutive week, gaining 3.1% to average $81.6/bl, up from $79.1/bl the previous week.
  • Oil hit a fresh four-year high above $82.0/bl on 25 September as the upcoming US sanctions on Iran lifted prices, as this could lead to reduced supplies.
  • However, the announcement by Nigeria’s OPEC representative suggests that OPEC will balance the oil market albeit with little spare capacity.
  • API 2 coal rose 0.9% to average $97.6/t last week, hitting a five-year high of $98.8/t on 24 September.
  • EU ETS carbon prices experienced a second consecutive weekly decline, dropping 0.2% to average €21.1/t.
  • A total of 21.6mn EUAs were up for auction, following the sale of 12.6mn the previous week.
  • Prices started the week up at €22.6/t following an EU auction of 4.2mn EUAs at €22.4/t on 24 September. However, prices fell to below €19.7/t on 26 September following weaker auction results.
  • Belgian nuclear power outages could support carbon prices with only one nuclear reactor online from 20 October, reducing capacity to 1GW. This could result in higher fossil fuel burning in Europe and push demand for EUAs higher.
Wholesale price snapshot

Wholesale price snapshot 28 September 2018

Posted by TEAM on 28 September 2018
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