Headlines for Monday, 6th August
- The majority of gas and power contracts rose last week, as EU ETS carbon continued with bullish momentum to hit a fresh seven-year high.
- EU ETS carbon prices reached €17.8/t on 1 August as prices continue to be supported by higher power demand across Europe this summer amid ongoing heatwaves sweeping the continent.
- Day-ahead gas prices gained 1.9% to 58.7p/th. This was despite demand for gas dropping 8.1% from the previous week and the gas system being largely oversupplied. Prices have been influenced by bullish EU ETS carbon prices. Seasonal gas contracts gained 0.8% on average. Winter 18 gas was the exception, down 0.6% to 63.6p/th.
- Day-ahead power began the week down due to rising levels of wind output. Prices ended the week up 6.3% at £59.7/MWh, with wind forecasted below 2.0GW at the start of this week. Seasonal power contracts went up 0.7% on average.
- Nearly all seasonal gas and power contracts increased last week.
- Brent crude oil slipped 0.2% to average $73.8/bl, down from $74.0/bl the previous week. Oil prices rose early in the week as Saudi Arabia suspended shipments through the Red Sea’s Bab al-Mandeb strait following attacks on ships from members of the Houthis movement, but fell following the announcement of an increase in US crude stocks.
- API 2 coal slipped 0.7% to average $86.1/t last week, despite strong demand from Asia as the heatwave continued across the region and increased power demand for cooling.
Brent Crude Oil
Brent crude oil slipped 0.2% to average $73.8/bl, down from $74.0/bl the previous week.
Oil prices started the week up at $74.3/bl as Saudi Arabia suspended shipments through the Red Sea’s Bab al-Mandeb strait due to attacks on ships from members of the Houthis movement. Prices later fell as news that US President Donald Trump offered to meet with Iranian leaders eased potential supply concerns. Prices fell towards of the end of the week, dropping below $72.0/bl after the EIA announced US crude stocks had risen the previous week by 5.6mn bl. Oil prices then recovered these losses, rising at the end of the week to $73.6/bl, amid expectations of a decrease in US oil stocks.
API 2 Coal
API 2 coal slipped 0.7% to average $86.1/t last week, despite continued strong demand from Asia as the heatwave continued across the region and increased power demand for cooling.
EU ETS Carbon
EU ETS carbon prices increased 0.6% to average €17.3/t last week, up from €17.2/t the previous week. EUA prices peaked at €17.8/t on 1 August, a fresh seven-year high. The recent bullish momentum has led to analysts reforecasting EUA prices higher according to a recent survey by Reuters. The survey of 8 analysts expects EU ETS carbon prices to average €18.6/t for 2019 and €20.8/t in 2020.
Near-term gas contracts experienced mixed movements last week.
Day-ahead gas gained 1.9% to 58.7p/th, despite demand for gas dropping 8.1% from the previous week. Prices have been influenced by bullish EU ETS carbon prices, which have acted to make gas-fired power generation more favourable relative to coal. The UK received its first August LNG cargo arrival last week, after the Boris Vilitsky from Yamal arrived at the Isle of Grain on 3 August. The Qatari LNG tanker Al Aamriya is expected to arrive at South Hook on 10 August.
Month-ahead gas also increased 0.5%, rising to 58.4p/th, but down 1.1% from the same period last month when it was at 59.1p/th.
Nearly all seasonal gas contracts ascended last week, up 0.8% on average.
Winter 18 gas was the exception, dropping 0.6% to 63.6p/th. Summer 19 and winter 19 increased 0.6% and 0.2% to 51.6p/th and 59.2p/th respectively.
Annual October 18
Annual October 18 remained unchanged at 57.6p/th.
The contract is 1.5% below its price the same time last month (58.4p/th) and 31.4% higher than the same time last year (43.8p/th).
Near-term baseload power contracts experienced mixed movements last week.
Day-ahead power rose 6.3% week-on-week to £59.7/MWh on 3 August, up from £56.1MWh the previous week. Day-ahead power prices are currently at their highest since 16 March 2018 and have been supported by higher gas prices and an increase in EU ETS carbon prices. However, increased wind generation from the previous week and a fall in power demand led to lower power prices early in the week.
Month-ahead power remained at £59.0/MWh, and October 18 power gained 0.1% to £59.0/MWh.
Nearly all seasonal baseload power prices grew last week, up 0.7% on average. Winter 20 was the exception remaining unchanged at £55.0/MWh.
Winter 18 increased 0.1% to £62.1/MWh. Summer and winter 19 gained 1.0% and 0.9% to £51.6/MWh and £57.8/MWh respectively.
Annual October 18
The annual October 18 power contract gained 0.5% to £56.9/MWh (up from £56.6/MWh).
This is £0.3MWh (0.5%) higher than the same period last month, and an increase of 32.4% from last year when it was £43.0/MWh.