Smarter Business Weekly Energy Industry Market Review - Desk with graphs

Energy Market Review, Monday 11th June

Headlines for Monday, 11th June

  • The majority of gas and power contracts up to, and including, winter 18 trended downwards last week. This was driven by an improved supply outlook and a reduction in oil prices.
  • Day-ahead gas prices dropped 0.7% week-on-week to 57.6p/th. Despite rising demand forecasts through to Thursday, prices dropped as temperatures rose towards the end of the week causing lower demand. Winter 18 gas was the only seasonal gas contract to drop last week, falling 1.8% to 62.5p/th. The decrease in price came as European gas stocks have been refilled at record levels and amid a fall in oil prices.
  • Day-ahead power prices closely followed its gas counterpart down, falling 0.2% to £56.2/MWh week-on-week. Winter 18 power followed its gas counterpart, lowering 1.1% to £60.3/MWh.
  • Oil prices have continued to fluctuate in response to ongoing geopolitical tensions between the US and OPEC nations, including Venezuela and Iran. Week-on-week Brent crude oil prices have fallen by 0.8% to $77.0/bl, as US crude oil well production increased.
  • EU ETS carbon prices rose 6.6% week-on-week to €15.9/t. Prices hit a fresh seven-year high on 5 June at €16.7/t and are currently more than triple this time last year. Carbon prices have risen amid a reduction in the number of surplus carbon allowances in the market and the upcoming implementation of the 2019 Market Stability Reserve which could see the availability of EUAs cut.

Brent Crude Oil

Brent crude oil fell 1.0% to average $75.9/bl, down from $76.7/bl the previous week. Prices are 1.3% below the same time last month ($76.9/bl), and 54.9% higher than this time last year ($49.0/bl). Oil prices have continued to remain volatile last week due to ongoing geopolitical tensions. Oil prices rose towards the end of last week as concerns grew over Venezuela’s ability to maintain current oil export levels in the face of potential US sanctions during the country’s economic crisis. However, prices have been weighed on by rising US oil well production.

API 2 Coal

API 2 coal prices recovered the previous week’s losses, rising 1.2% on average to $88.3/t, up from $87.3/t the previous week. Coal prices are continuing to be supported by high Asian coal demand, which has been caused by recent heatwaves in Northern Asia causing demand for air conditioning to surge.

EU ETS Carbon

EU ETS carbon prices rose 0.2% to average €15.8/t last week, up from €15.7/t the previous week. Prices continued to set fresh highs, peaking at €16.7/t on 5 June, the highest since 2011. EUA prices are currently double the price seen in January 2018 when they were around €8.0/t. Prices have been supported by the Market Stability Reserve which is expected to see a reduction in the availability and supply for EUAs from 2019, as well as a reduction in the number of surplus allowances in the market.

NBP Gas

Near-term

Day-ahead gas fell 0.7%th to 57.6p/th last week.
The week started with rising prices as the system was undersupplied with lower wind output leading to an increase in gas demand for electricity generation. Despite rising demand forecasts through to Thursday, prices dropped as temperatures rose towards the end of the week causing lower demand than expected.
Month-ahead gas prices slipped 1.5% to 55.4p/th.

Seasonal

Most seasonal gas contracts experienced bullish movement last week, rising 1.5% on average.
Winter 18 gas was the exception, falling 1.8% to 62.5p/th. Summer 19 gained 2.3% to 48.5p/th and winter 19 increased 1.9% to 55.9p/th.

Annual October 18

Annual October 18 remained unchanged at 55.5p/th.
The contract is 1.2% above its price the same time last month (54.8p/th) and 28.7% higher than the same time last year (43.1p/th).

Baseload Power

Near-term

All near-term baseload power contracts fell last week.
Day-ahead power dropped 0.2% to £56.2/MWh, down from £56.3/MWh the previous week.
Day-ahead power mirrored its gas counterpart down despite lower renewables generation early last week.

Seasonal

Nearly all seasonal baseload power prices increased last week, rising on average by 0.1%.
Winter 18 and winter 20 were the exceptions, falling 1.1% and 0.6% to £60.3/MWh and £52.8/MWh respectively. Winter 18 power is up 1.1% from the previous month when it was £59.7/MWh.
Summer 19 gained 0.9% to £49.3/MWh and winter 19 power rose 0.6% to £54.6/MWh.

Annual October 18

The annual October 18 power contract declined 0.2% to £54.8/MWh (down from £54.9/MWh).
This is an increase of £0.5/MWh (0.9%) from the same period last month, and an increase of 32.5% from last year when it was £41.4/MWh.