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Energy Market Review, Monday 20th August

Headlines for Monday, 13th August

  • All gas and power contracts rose last week, with all seasonal contracts hitting fresh highs as bullish market fundamentals, including 10-year high carbon prices and rising coal prices, continued to give support.
  • EU ETS carbon prices increased 2.8% to average €18.1/t last week. Prices were supported by an announcement from the European Commission that German auctions will be postponed from 9 November until Q119, deferring the sale of 21.8 million allowances until next year.
  • Day-ahead gas prices gained 7.6% to 63.5p/th, a five-month high. Prices have been influenced by high EU ETS carbon prices, upcoming strikes in the North Sea, and annual maintenance affecting Norwegian gas supplies. Seasonal gas contracts gained 2.5% on average. Winter 18 gas increased 5.6% to 69.3p/th.
  • Day-ahead power prices rose 5.5% to end the week up at a fresh five-month high of £63.3/MWh, with higher gas prices and low wind output forecast for early next week. Seasonal power contracts went up 2.3% on average. Winter 18 power was up 4.2% to £66.3/MWh.
  • All seasonal gas and power contracts increased last week, hitting fresh highs on 17 August.
  • Brent crude oil prices fell for the fourth consecutive week, lowering 1.9% to average $72.1/bl. The announcement of an unexpected build in US crude stockpiles, up by 6.8mn barrels, led prices to drop below $70.5/bl on 15 August.
  • API 2 coal rose 1.3% to average $88.4/t last week.

Brent Crude Oil

The weekly average Brent crude oil price fell for the fourth consecutive week, losing 1.9% to average $72.1/bl, down from $73.4/bl the previous week.
Prices started the week at $73.0/bl, amid expectations of a tighter market following US sanctions on Iran. announcement of an unexpected build in US crude stockpiles, up by 6.8mn barrels in the week ending 10 August, led prices to drop below $70.5/bl on 15 August. Prices gained support towards the end of the week following news of trade talks between the US and China in late August.

API 2 Coal

API 2 coal rose 1.3% to average $88.4/t last week. Chinese demand for coal has dropped slightly as high temperatures in the region have eased, falling towards normal seasonal temperatures and reducing the demand for air conditioning.

EU ETS Carbon

EU ETS carbon prices rose for the eighth consecutive week, increasing 2.8% to average €18.1/t last week, up from €17.6/t the previous week.
Prices started the week up at €18.0/t on 13 August, rising to a fresh 10-year high on 15 August at €18.3/t, following an announcement from the European Commission that German auctions will be postponed from 9 November until Q119, deferring the sale of 21.8 million allowances until next year.

NBP Gas

Near-term

Day-ahead gas gained 7.6% to 63.5p/th from the previous week. Gas prices started the week up as another 12-hour strike began on Monday morning at Total’s North Sea gas platforms; Alwyn, Elgin Franklin and Dunbar. Prices found further support throughout the week amid reduced Norwegian flows following three unplanned outages at Troll, Visund and Kvitebjørnon on 16 August. Annual maintenance at the Troll Field, and upcoming strikes on 20 August in the North Sea, pushed prices to a five-month high at the end of the week.
September 18 gas rose 6.0% week-on-week to 63.8p/th. October 18 gas also increased, rising 5.7% to 63.9p/th, up 9.7% from the same period last month when it was at 58.1p/th.

Seasonal

All seasonal gas contracts rose week-on-week, up 2.5% on average. All contracts hit fresh highs on 16 August, driven by power fundamentals as EU ETS carbon and API 2 coal prices rose. Winter 18 and summer 19 rose 5.6% and 2.7% to 69.3p/th and 54.7p/th respectively.

Annual October 18

Annual October 18 rose 4.3% week-on-week to 62.0p/th, a fresh high since our records began in September 2015. The contract is 7.3% above its price the same time last month (57.7p/th) and 39.0% higher than the same time last year (44.6p/th).

Baseload Power

Near-term

All near-term baseload power contracts continued to experience bullish movements last week.
Day-ahead power rose 5.5% week-on-week to £63.3/MWh (up from £60.0/MWh), a five-month high. Prices dropped mid-week as wind output increased, however, prices recovered losses on 17 August following gas prices higher and forecasts of low wind output early next week.
September 18 power gained 4.3% to £62.5/MWh. October 18 power gained 4.4% to £63.1/MWh.

Seasonal

Week-on-week, seasonal contracts were up 2.3% on average. All seasonal baseload power contracts hit fresh highs on 17 August, with winter 18 power rising 4.2% to £66.3/MWh, the highest on our records dating back to September 2015.
Summer and winter 19 gained 2.3% and 1.6% to £54.1/MWh and £59.8/MWh respectively.

Annual October 18

The annual October 18 power contract gained 3.3% to £60.2/MWh (up from £58.2/MWh), the highest since our records began in 2015.
The contract is £3.5/MWh (6.2%) higher than the same period last month, and 36.9% above last year when it was £44.0/MWh.