Energy Market Review, Monday 3rd September
Headlines for Monday, 3rd September
- All gas and power contracts rose last week, with contracts continuing to hit new highs amid bullish market fundamentals, including fresh 10-year high carbon prices, and rising coal and oil prices.
- EU ETS carbon prices increased 4.9% to average €20.5/t. Prices hit a fresh 10-year high of €21.8/t on 27 August amid low auction levels caused by the bank holiday on Monday.
- Day-ahead gas prices gained 4.1% to 69.3p/th. The contract hit a fresh five-month high of 70.4p/th on 30 August. Gas prices rose at the start of the week amid expectations of cooler temperatures in the following days, and were further supported by unplanned outages at gas facilities in Norway. Seasonal gas contracts gained 2.0% on average. Winter 18 gas increased 2.2% to 73.1p/th.
- Day-ahead power prices rose 2.7% to end the week up at £67.0/MWh, continuing to find support from rising commodity prices. Seasonal power contracts went up 2.8% on average, with winter 18 power up 2.7% to £70.7/MWh.
- All seasonal gas and power contracts increased, also hitting new highs last week.
- Brent crude oil prices continued climb, lifting 2.5% to average $75.5/bl. Prices started the week up at $76.7/bl, before rising to $77.4/bl on 30 August following news that 2.6mn barrels were withdrawn from US crude stocks.
- API 2 coal rose 1.8% to average $91.0/t last week. Coal hit a fresh five-year high on 29 August at $93.3/t.
Brent Crude Oil
The weekly average Brent crude oil price rose for the second consecutive week, gaining 2.5% to average $75.3/bl, up from $73.5/bl the previous week.
Prices started the week up at $76.7/bl, before rising to $77.4/bl on 30 August following news of a 2.6mn barrel withdrawal in US crude stocks. Upcoming US sanctions on Iran continues to incite market volatility, with concerns over the uncertainty of supply security and OPEC production levels. Concerns of a potential global trade war have led to prices ending the week above $77.0/bl, but with news of a meeting in Algiers on 23 September to review OPEC’s monitoring mechanisms capping any gains.
API 2 Coal
API 2 coal rose 1.8% to average $91.0/t last week. API 2 coal rose to a five-year high on 28 August to $93.3/t. Strong demand continues to be driven by Asian markets, with news that Thai imports in July climbed 57% year-on-year to 2.3mn tonnes.
EU ETS Carbon
EU ETS carbon prices rose for the tenth consecutive week, increasing 4.9% to average €20.5/t, up from €19.5/t the previous week.
Prices started the week at €21.8/t on 27 August, supported by low auction volumes on the bank holiday, before easing in the middle of the week to below €21.0/t.
All near-term gas contracts increased last week.Day-ahead gas gained 4.1% to 69.3p/th from the previous week. Gas prices rose at the start of the week amid expectations of cooler temperatures in the following days, and were further supported by unplanned outages at Kollsnes, Gullfaks and Åsgard gas facilities in Norway. Prices continued higher throughout last week, peaking at 70.4p/th on 30 August.
September 18 gas increased 4.5% to end the week at 68.9p/th, supported by upcoming outages in the UK Continental Shelf in September. September 18 gas hit a fresh high of 70.0p/th. October 18 gas ended the week at a record high of 68.3p/th, up 3.3% from the previous week.
All seasonal gas contracts rose week-on-week, up 2.0% on average. All contracts hit fresh highs last week, continuing to be driven by power fundamentals as EU ETS carbon and API 2 coal prices continued to rise. Winter 18 was up 2.2% to 73.1p/th, having peaked at 74.6p/th during the week.
Annual October 18
Annual October 18 gas rose 2.4% week-on-week to 65.4p/th. The contract hit 67.0p/th on 30 August, the highest since our record for the contract began in September 2015. The contract is 13.6% above its price the same time last month (57.6p/th), and 47.3% above its price the same time last year (44.4p/th).
All near-term baseload power contracts continued to experience upwards momentum last week. Day-ahead power rose 2.7% week-on-week to £67.0/MWh. The contract hit a fresh five-month high of £68.9/MWh, amid relatively low wind output. Prices have continued to find support from rising commodity and gas prices.
Both September 18 and October 18 power rose throughout the week and reached record highs, both at £67.9/MWh. September 18 power gained 4.5% to end the week at £67.8/MWh, and October 18 power gained 3.1% to £67.9/MWh.
Week-on-week, seasonal contracts were up 2.8% on average. All seasonal baseload power contracts hit fresh highs last week. On 30 August, winter 18 power peaked at £70.7/MWh and summer 19 rose to £58.8/MWh.
Annual October 18
The annual October 18 power contract gained 2.8% to £64.4/MWh (up from £62.7/MWh). The contract hit a record high of £64.7/MWh on 30 August.
The contract is £7.5/MWh (13.2%) higher than the same period last month, and 47.7% above the same time last year when it was £43.6/MWh.