Headlines for Monday, 16th April
- Last week was dominated by bullish movements in all wholesale contracts.
- Day-ahead gas rose 8.2% week-on-week to 53.0p/th (up from 49.0p/th), with contracts for this summer experiencing similar gains. Day-ahead prices were driven by weaker wind output, which increased gas demand for power generation, and reduced flows from the Norwegian interconnector as flows are rerouted to Europe. Seasonal gas contracts increased 3.5% on average, taking direction from a rise in oil prices.
- Brent crude oil gained 4.0% to average $70.5/bl and reached a three-year high of $72.8/bl on Friday, its biggest weekly gain since July 2017. Bullish movements were driven by rising geopolitical tensions.
- EU ETS carbon prices grew 3.0% to average €13.4/t, and peaked at $14.1 on Friday afternoon, despite some analysts’ projections of a near-term downwards correction to prices.
- API 2 coal prices increased 5.3% last week, averaging $79.9/t. The growth comes as Chinese coal imports rose 16.6% to 75.4mn tonnes in March from March 2017.
- Day-ahead peak power grew £1.4/MWh (2.6%) to £53.5/MWh. Seasonal peak power contracts averaged an increase of 4.0% from the previous week. Day-ahead baseload power grew 1.7% to £50.8/MWh, driven upwards by bullish trends in gas prices, as well as weaker wind generation across the week. Seasonal baseload power prices raised last week, increasing on average by 3.6%, taking direction from gas, coal and oil markets.
Brent Crude Oil
Brent crude oil gained 4.0% to average $70.5/bl, and reached a three-year high of $72.8/bl on Friday, its biggest weekly gain since July 2017.
Bullish movements were driven by rising geopolitical tensions. After trade war tensions eased between China and the US, there has been growing tensions between US allied countries and Syrian allied countries, which has led to US President Donald Trump threatening military action in the region.
API 2 Coal
API 2 coal prices increased 5.3% last week, averaging $79.9/t (up from $76.0/t).
Chinese coal imports grew 16.6% to 75.4mn tonnes in March from March 2017, with six Chinese coal-fired power plants boosting inventories from 12 April to 14mn tonnes, up from 10mn at the start of 2018.
EU ETS Carbon
EU ETS carbon prices grew last week 3.0% to average €13.4/t last week.
EU ETS carbon has continued bullish trends from last month, continuing to be driven by speculators rather than market fundamentals, and reached a two-week high after peaking on 28 March.
All near-term gas contracts experienced growth last week. Day-ahead gas grew 8.2% week-on-week to 53.0p/th (up from 49.0p/th).
Prices have behaved with bullish momentum, following reduced wind power over the week and colder than average temperatures. Flows from the Norwegian interconnector were also lower this week as gas was rerouted to continental Europe. This bullish momentum was despite demand being supplemented by the arrival of LNG tankers Maran Gas Apollonia from Egypt on 8 April and BW Boston from Trinidad on 9 April. Two further LNG tankers are scheduled to arrive in the UK from Qatar on 24 and 27 April.
All seasonal gas contracts experienced bullish growth, gaining 3.5% on average. Winter 18 gas upturned 5.4% to 55.9p/th and the summer 19 gas reached 42.0p/th, up 3.7%.
Annual October 18
Annual October 18 gas ascended 4.6% to 49.0p/th.
The contract is 6.4% above its price the same time last month (46.0p/th) and is 13.4% higher than the same time last year (43.2p/th).
All near-term baseload power contracts rose last week.
Day-ahead power grew 1.7% to £50.8/MWh, up from £49.9/MWh the previous week.
Near-term baseload power prices responded to the bullish momentum in gas prices, and a reduction in wind output over the week.
Seasonal baseload power prices all grew last week, increasing on average by 3.6%, taking direction from gas, oil, coal and carbon prices.
Winter 18 power reached a three-year high at £54.9/MWh, an increase of 4.6% from the previous week. Winter 18 is up 24.7% from this time last year when it was at £44.0/MWh.
Annual October 18
The annual October 18 power contract lifted 4.0% to £49.6/MWh.
In comparison, this is an increase of £3.7/MWh (8.1%) from the same period last month. This is an increase of 20.8% from the same time last year when it was £41.0/MWh.