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Energy Market Review, Monday, 26th February

Headlines for Monday, 26th February

  • Last week saw gains across power, gas and commodity contracts, with substantial rises experienced in day-ahead gas and power prices.
  • Day-ahead baseload power experienced notable growth across the week, rising 30.1% to £64.0/MWh, an eight-month high. This was driven by the curtailment in forecast wind generation, higher gas prices and an uptick in power demand amid cold weather. In addition, all near-term peak power contracts moved higher. Day-ahead peak power surged 34.8% to £71.3/MWh.
  • Day-ahead gas leapt 45.4% to 73.0p/th, a two-month high. A series of unplanned outages at the start of the week, forecasts of colder temperatures, and low imports of LNG supported prices.
  • API 2 coal prices climbed last week, rising 4.6% to average $82.5/t. Higher gas prices resulted in greater demand for coal for power generation, as the spreads became more favourable.
  • Brent crude oil prices rose 2.5% to average $65.2/bl throughout the week. Drivers of growth across the week stemmed from renewed rising tensions between Israel and Iran, and the recovery of the global equity market.
  • EU ETS carbon prices grew 0.8% to average €9.7/t last week. Carbon prices rose amid more favourable spreads for coal-fired power generation and reacted to rising German power prices. Prices rose towards the end of the week reacting to a dip in the next auctions volume.

Brent Crude Oil

Brent crude oil prices rose 2.5% to average $65.2/bl throughout the week.  Drivers of growth across the week stemmed from rising tensions in the Middle East between Israel and Iran, and the recovery of the global equity market. American Petroleum Institute data showed US crude inventories fell by 907,000 barrels in the previous week.

API 2 Coal

API 2 coal prices climbed last week, rising 4.6% to average $82.5/t. Growth has come from forecasts of colder weather and rising gas prices. Higher gas prices resulted in greater demand for coal for power generation, as coal spreads became more favourable. On the 22 February prices rose amid reports of coalminer strikes across South Africa.

EU ETS Carbon

EU ETS carbon prices grew 0.8% to average €9.7/t last week. Carbon prices rose amid more favourable spreads for coal-fired power generation and reacted to rising German power prices. Prices also rose towards the end of the week with a dip in auction volume (4.8% to 20.6mn) for the following auction next week.

NBP Gas

Near-term

All near-term gas contracts experienced gains last week. Day-ahead gas leapt 45.4% to 73.0p/th, a two-month high. A series of unplanned outages at the start of the week, forecasts of colder temperatures, and low imports of LNG supported prices. The month-ahead (March) contract leapt 13.6% to 57.8p/th last week. The contract is now 15.8% higher than its level last year (49.9p/th).

Seasonal

All seasonal gas contracts climbed last week, increasing 2.2% on average. Summer 18 gas grew 3.4% to 43.7p/th and the winter 18 contract gained 2.9% to 51.3p/th

Annual April 18

Annual April 18 gas rose 3.1% to 47.5p/th. The contract is now 1.9% above its price the same time last month (46.6p/th). It is also 3.8% higher than the same time last year (45.7p/th)

Baseload Power

Near-term

All near-term baseload power contracts increased last week. Day-ahead baseload power experienced notable growth across the week, rising 30.1% to £64.0/MWh, an eight-month high. This was driven by the curtailment in forecast wind generation, higher gas prices and an uptick in power demand amid cold weather. The month-ahead (March) contract boosted 8.9% to £53.8/MWh. The contract is now 12.8% above its level a month ago (£47.7/MWh)

Seasonal

All seasonal baseload power prices moved higher last week, rising on average by 1.3%. Summer 18 power gained 2.1% to £44.0/MWh and the winter 18 contract lifted 2.0% to £49.8/MWh

Annual April 18

The annual April 18 power contract went up 2.1% to £46.9/MWh. In comparison with the same period last month (£46.3/MWh), prices were 1.3% higher. Additionally, the value was 10.1% higher than the same time last year (£42.6/MWh).