Energy Market Review, Monday 30th April
Headlines for Monday, 30th April
- Day-ahead gas rose 3.2% to 53.5p/th, increasing in response to cooler temperatures in the latter part of last week and unexpected supply outages in Norway. Month-ahead gas was the only gas contract to fall, dropping 0.9% week-on-week to 51.7p/th.
- All baseload power contracts increased last week. Week-on-week, day-ahead baseload power rose 5.6% to £53.5/MWh. Despite rising renewables output and falling coal-fired power generation, prices responded bullishly to higher gas prices and increased demand at the week’s end.
- Brent crude oil gained 0.6% week-on-week to average $74.4/bl. Bullish behaviour led to oil hitting a fresh three-and-a-half year high on 23 April at $75.4/t. Behaviour has been driven by geopolitical uncertainty between Iran and the US, and comes despite a rise US crude inventories and a strengthening US dollar.
- Week-on-week EU ETS carbon prices grew 2.1% to €13.4/t (up from €13.1/t). The average EUA price across the week was €13.2/t, down from the previous week’s average of €13.7/t.
- Week-on-week API 2 coal has reduced 0.3%, lowering to $83.t/t on 27 April from $83.3/t on 20 April. Most clean dark spreads increased last week. Although the majority of clean dark spreads remain below their clean spark counterparts, spreads for winter 18 are more favourable towards coal-fired power generation over gas. This comes despite a new record for zero-coal last week and suggests coal could play a role this winter.
Brent Crude Oil
Brent crude oil continued to behave with bullish momentum last week, boosting 2.2% to average $74.3/bl, climbing from $72.7/bl the previous week.
Brent crude hit fresh highs not seen since November 2014, peaking at $75.4/bl on 24 April. Oil was influenced this week by continued discussions on sanctions imposed by the US on Iran which are set to be renewed. Bullish behaviour comes despite rising US crude oil inventories which rose 2.17mn barrels for the previous week according to Reuters, and a strengthening US dollar which has climbed back towards January 2018 levels.
API 2 Coal
API 2 coal prices increased 1.6% last week, averaging $83.4/t (up from $82.1/t). API 2 coal prices remain higher compared to the same period last year ($65.9/t), up 26.5%.
EU ETS Carbon
EU ETS carbon prices slipped 4.1% to average €13.2/t last week. EU ETS carbon has curtailed from its high of €14.2/t, amid the release of a report by Carbon Tracker, the London-based environmental think tank, which suggest prices will hit €20.0/t in 2019 and up to €30.0/t by 2021. The report also indicates that EUA prices would need to quadruple, reaching up to €55.0/t by 2030 to meet Paris climate targets.
The majority of near-term gas contracts increased last week. Day-ahead gas gained 3.2%, rising 1.7p/th to 53.5p/th.
Day-ahead gas rose with cooler temperatures leading to increased demand in the latter half of last week. Month-ahead contracts were supported by bullish oil prices, which have continued to rally to fresh highs last week, peaking at $75.4/bl.
The exception to the increasing near-term gas contracts was May 18 gas, which fell 0.9% to 51.7p/th (down from 52.2p/th). The contract is 9.2% higher than in the same period last month (47.4p/th).
Nearly all seasonal gas contracts continued to experience bullish growth, gaining 1.3% on average.
Winter 18 gas boosted 1.3% to 57.9p/th and summer 19 gas reached 45.0/th, up 3.1% from last week and 10.7% from the same period last month.
Annual October 18
Annual October 18 gas lifted 2.1% to 51.5p/th.
The contract is 9.2% above its price the same time last month (47.1p/th) and is 21.5% higher than the same time last year (42.4p/th).
All near-term baseload power contracts rose last week. Day-ahead power increased 5.6% to £52.5/MWh, up from £49.8/MWh the previous week.
Power contracts responded bullishly to gas price increases despite higher wind generation throughout the week. Rising commodity prices have also supported power prices.
All seasonal baseload power prices grew last week, increasing on average by 1.6%.
Winter 18 power continued to climb, reaching a fresh three-year price high at £56.0/MWh, an increase of 1.4% from the previous week. Winter 18 is up 29.0% from last year (up from £43.4/MWh).
Summer 20 saw the largest growth, climbing 2.9% to £42.7/MWh. This is up from £38.4/MWh last month (an increase of 11.3%).
Annual October 18
The annual October 18 power contract increased 1.3% to £50.6/MWh (up from £50.0/MWh). This is an increase of £3.0/MWh (6.2%) from the same period last month, and an increase of 25.4% from 2017 when it was £40.4/MWh.