Energy Market Review, Monday 23rd April
Headlines for Monday, 23rd April
- Last week was dominated by bullish movements in most wholesale contracts, as gas, power and commodity prices reached fresh multi-year highs.
- Day-ahead gas was the only gas contract to fall, dropping 2.3% week-on-week to 51.8p/th. The fall was driven by lower demand caused by higher than average temperatures across the week, as well as high levels of renewables output.
- May 18 gas reached its highest price since February 2017, hitting 52.2p/th.
- Nearly all peak power contracts experienced growth last week. Day-ahead peak power fell 2.5% to £52.2/MWh from the previous week. Seasonal peak power contracts experienced an average growth of 0.4% from the previous week, with only summer 20 seeing losses (down 0.3%).
- Day-ahead baseload power slipped 2.0% to £49.8/MWh.
- Prices were weighed on by increased wind and solar generation, which, in combination with lower demand, led to a UK record of 55 hours without coal-fired power plant generation.
- Brent crude oil gained 2.2% to average $72.0/bl, up from $70.5bl. Bullish behaviour led to oil hitting a fresh three-and- a-half year high on 19 April at $74.75/t.
- Bullish momentum has continued to be driven by the OPEC supply cap. EU ETS carbon prices reached a fresh seven-year high on 19 April, peaking at €14.2/t but averaged €13.6/t across the week.
- Prices fell to €13.1/t on 20 April, down 5.9% week-on- week, following profit-taking after the fresh high.
Brent Crude Oil
Brent crude oil experienced a bullish rally last week, boosting 2.2% to average $72.0/bl, climbing from $70.5/bl the previous week. Brent crude hit highs not seen since November 2014, peaking at $74.8/bl on 19 April. Bullish momentum has been driven by the continued OPEC supply cap, with Saudi oil minister Khalid al-Falih saying that the OPEC led target of reducing oil inventories is still far away. Prices were supported in the latter half of the week with the announcement of a decline in US crude inventories, and US President Donald Trump criticising OPEC for creating artificially high prices.
API 2 Coal
API 2 coal prices increased 1.9% last week, averaging $81.4/t (up from $79.9/t). API 2 coal prices remain higher compared to the same period last year ($54.4/t), up 32.4%.
EU ETS Carbon
EU ETS carbon prices grew 1.8% last week to average €13.6/t last week, hitting fresh seven-year highs when it peaked at $14.22/t on 16 April. Analysts suggest carbon prices are continuing to be driven primarily by speculators pushing prices higher and chasing short-term profit-taking.
Nearly all near-term gas contracts increased last week. The only exception was day-ahead gas, which went down 2.3% to 51.8p/th (down from 53.0p/th). Day-ahead gas fell last week with rising temperatures causing reduced demand. Intermittent wind generation was responsible for fluctuating prices across the week and is forecast to be stronger this week. The month-ahead (May) contract reached its highest price since February 2017, gaining 4.1% to 52.2p/th last week. The contract is 11.2% higher than its level in the same period last month (46.9p/th).
All seasonal gas contracts continued to experience bullish growth, gaining 2.2% on average. Winter 18 gas boosted 2.3% to 57.2p/th and summer 19 gas reached 43.6p/th, up 3.9% from last week and 9.7% from the same period last month.
Annual October 18
Annual October 18 gas lifted 3.0% to 50.4p/th. The contract is 8.9% above its price the same time last month (46.3p/th) and is 16.8% higher than the same time last year (43.2p/th).
The majority of near-term baseload power contracts rose last week. An exception was day-ahead power, which dropped 2.0% to £59.8/MWh, down from £50.8/MWh the previous week. Spot power contracts responded to increased renewables generation which saw both solar and wind output increasing from the previous week.
Most seasonal baseload power prices grew last week, increasing on average by 1.5%. Summer 19 power rose to its highest price since April 2015, climbing to £44.7/MWh (up from £37.8/MWh in the same period last year).
Annual October 18
The annual October 18 power contract increased 0.8% to £50.0/MWh (up from £49.6/MWh). This is an increase of £3.2/MWh (6.8%), from the same period last month. This is an increase of 22.1% from 2017 when it was £40.9/MWh.