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Energy Market Review, Monday 19th March

Headlines for Monday, 12th March

  • Last week saw a reversal of trends compared to the previous week, as day-ahead power and gas contracts leapt upwards.
  • Contracts further along the curve eased downwards, despite some reaching multi-year highs early in the week.
  • Day-ahead gas leapt 25.9% week-on- week to 67.0p/th, up from 53.2p/th the previous week.
  • Growth stemmed from forecasts of below seasonal normal temperatures. Support for prices was coupled with concerns over the capacity of gas reverses in the UK and across Europe. Day-ahead power gained 20.2% to £63.5/MWh.
  • Prices were pushed upwards by a cocktail of low wind generation, rising day-ahead gas prices and higher carbon prices. On 13 March, EU ETS carbon prices hit a fresh six-year- and-a- half high of €11.5/t.
  • Prices grew 6.3% to average €11.2/t last week.
  • Higher CO2 levels amid rising industrial productivity throughout Europe supported carbon price growth.
  • Brent crude oil prices experienced an uptick of 0.4% to average $65.1/bl throughout the week.
  • Oil prices increased with the announcement of new Russian sanctions imposed by the US.
  • Expectations that current OPEC conditions are unlikely to change for the remainder of the year further supported prices. API 2 coal prices extended upon the previous week’s losses, declining 1.6% to average $76.1/t.

Brent Crude Oil

Brent crude oil prices experienced an uptick of 0.4% to average $65.1/bl throughout the week.
Drivers of growth stemmed from the announcement of new Russian sanctions imposed by the US. An announcement by Iran’s oil minister, claiming that current OPEC conditions are unlikely to change for the remainder of the year, also supported prices.

API 2 Coal

API 2 coal prices extended upon the previous week’s losses, declining 1.6% to average $76.1/t. With a cold snap forecast and low gas storage levels, European demand for coal grew throughout the week. Such gains were undermined by increasing Chinese production, as output over the past two-months climbed 5.7% year-on- year, easing demand for imports.

EU ETS Carbon

EU ETS carbon prices grew 6.3% to average €11.2/t last week. On 13 March, prices hit a fresh six-year- and-a- half high of €11.5/t. Higher CO2 output amid rising industrial productivity throughout Europe, most notably in Germany, helped support carbon prices upwards.

NBP Gas

Near-term

Most near-term gas contracts experienced losses last week, with the exception of gains observed in the day-ahead contract. Day-ahead gas leapt 25.9% week-on- week to 67.0p/th (down from 53.2p/th). Growth stemmed from forecasts of below seasonal normal temperatures projected for the weekend, uplifting gas demand. Concerns over the capacity of gas storage levels in the UK and across Europe also added support to prices. The month-ahead (April) contract declined 1.0% to 50.2p/th last week.

Seasonal

All seasonal gas contracts experienced losses, falling 2.1% on average. Summer 18 gas lost 1.2% to 45.0p/th and the winter 18 contract grew 0.7% to 52.5p/th.

Annual April 18

Annual April 18 gas fell 1.0% to 48.7p/th. The contract is now 5.8% above its price the same time last month (46.0p/th).

Baseload Power

Near-term

Most near-term baseload power contracts rose last week. Day-ahead power gained 20.2% to £63.5/MWh, up from £52.9/MWh the previous week. Low renewables output, particularly from wind, and rising gas and carbon prices saw the day-ahead power contract move upwards. The month-ahead (April) contract lowered 0.5% to £49.1/MWh.

Seasonal

Seasonal baseload power prices declined last week, falling on average by 1.1%. Summer 18 power dropped 0.4% to £45.4/MWh and the winter 18 contract fell 0.4% to £50.9/MWh.

Annual April 18

The annual April 18 power contract fell 0.4% to £48.2/MWh. In comparison with the same period last month (£46.0/MWh), prices were 4.8% higher.