Smarter Business Weekly Energy Industry Market Review - Desk with graphs

Energy Market Review, Tuesday 29th May

Headlines for Tuesday, 29th May

  • After a prolonged period of growth, Brent crude oil spent much of last week around the $79.0/bl mark. Prices stayed high as improving US-Chinese relations acted to improve the oil demand outlook, while new US sanctions against Venezuela are expected to further impact the nation’s oil output. However, prices showed a sharp decline on Friday, falling to $76.7/bl in the afternoon, as OPEC suggested relaxing current production cuts.
  • EU ETS carbon prices hit €16.1/t on 24 May, representing a fresh near seven-year high, but dropped to €15.9/t on Friday. Prices were supported by periods of high German power prices and strong EUA demand but were then weighed upon by weak auction results on Friday.
  • API 2 coal prices slipped to $86.5/t by the end of last week, down 3.8% on the previous Friday, driven lower by easing European demand.
  • After a period of bullish movement, day-ahead gas declined upon the previous week, falling 0.3% to 57.1p/th. Gas prices started the week down, but mid-week rose amid numerous gas supply outages. However, by the end of the week an improving supply outlook weighed on prices after the series of planned and unplanned outages across the UKCS came to an end.
  • Day-ahead power prices opposed trends seen in the gas market, increasing 2.4% to £56.0/MWh week-on-week, supported by lower wind output. However, on 24 May, day-ahead power reached a near three-month high of £57.0/MWh.

Brent Crude Oil

Brent crude oil increased 0.2% to average $78.9/bl, up from $78.7/bl the previous week.
Oil prices stayed high amid geopolitical developments. Improving US-Chinese relations also acted to improve the oil demand outlook, while new US sanctions against Venezuela are expected to further impact the nation’s oil output.
However, prices showed a sharp decline on Friday, falling to $76.7/bl in the afternoon, as OPEC suggested relaxing current production cuts.

API 2 Coal

API 2 coal prices slipped 0.5% on average last week to $88.6/t, lowering from $89.1/t the previous week.
API 2 coal has undergone mixed fundamentals as European demand eases, while this has been offset by rising Asian demand, most notably in India.

EU ETS Carbon

EU ETS carbon prices grew 6.3% to average €15.7/t last week, rising from €14.8/t the previous week.
EU ETS carbon prices hit €16.1/t on 24 May, representing a fresh near seven-year high, but dropped to €15.9/t on Friday. Prices were supported by periods of high German power prices and strong EUA demand but were then weighed upon by weak auction results on Friday.

NBP Gas

Near-term

After a period of bullish movement, day-ahead gas declined upon the previous week, falling 0.3%th to 57.1p/th. However, prices did reach a near three-month high of 59.0p/th on 24 May.
Gas prices started the week down, driven lower by easing demand and falling oil prices. However, such movement was soon revered amid a series of planned and unplanned outages across the UKCS, predominantly to Langeled and Vesterled pipelines and St. Fergus terminal, restricting supplies. An improving supply outlook, easing demand and a decline in oil prices towards the end of the week weighed on prices.

Seasonal

All seasonal gas contracts underwent bearish movement, declining 2.7% on average. Winter 18 gas lost 0.1% to 64.1p/th and summer 19 gas dropped 2.6% to 49.1p/th.

Annual October 18

Annual October 18 gas went down 1.2% to 56.6p/th.
The contract is 10.0% above its price the same time last month (51.5p/th) and 32.7% higher than the same time last year (42.6p/th).

Baseload Power

Near-term

All near-term baseload power contracts rose last week. Day-ahead power increased 2.4% to £56.0/MWh, up from £54.7/MWh the previous week. On 24 May prices reached a fresh near three-month high of £57.0/MWh.
With spot gas prices easing at the start of the week day-ahead power prices followed suit downwards. However, bullish mid-week gas and commodity prices fed into the power market and drove prices higher. Falling wind generation would have added to bullish fundamentals.

Seasonal

All seasonal baseload power prices declined last week on average by 1.3%.
Despite this, winter 18 power grew, reaching a fresh three-year price high at £67.0/MWh on 24 May, an increase of 0.4% from the previous week.

Annual October 18

The annual October 18 power contract eased 0.4% to £55.8/MWh (down from £56.0/MWh).
This is an increase of £5.2/MWh (10.2%) from the same period last month, and an increase of 36.9% from last year when it was £40.7/MWh.