Smarter Business Weekly Energy Industry Market Review - Desk with graphs

Energy Market Review, Tuesday 8th May

Headlines for Tuesday, 8th May

  • Bullish movement continued across gas and power contracts on the far-curve last week, while contracts on the near-curve predominantly experienced losses.
  • EU ETS carbon and API 2 coal prices rose, while oil pegged back from its recent highs. API 2 coal prices increased 1.2% last week, averaging $84.4/t (up from $83.4/t). Prices reached a two-month high of $85.8/t on 1 May. EU ETS carbon prices grew 0.8% to average €13.3/t last week. Prices were supported by rising European carbon emissions across the week.
  • Nearly all seasonal gas contracts continued to experience bullish growth, gaining 0.6% on average. Winter 18 gas gained 0.2% to 58.0p/th. Day-ahead gas fell 3.2%, down 1.7p/th to 51.8p/th. Prices dropped with warmer temperatures leading to reduced demand.
  • Similar movement occurred across the power equivalent, as seasonal baseload power prices climbed 0.9% on average. Winter 18 power continued to grow, reaching a fresh three-year price high at £56.3/MWh, an increase of 0.6% from the previous week. Winter 18 is up 7.4% from last month. Day-ahead power lost 1.8% to £51.6/MWh, down from £52.5/MWh the previous week. Power contracts responded to milder temperatures leading to reduced demand, lower gas prices and increased solar output.
  • Brent crude oil slipped 0.7% to average $73.8/bl, declining from $74.3/bl the previous week, despite the uncertainty about American-imposed sanctions on Iran.

Brent Crude Oil

Brent crude oil slipped 0.7% to average $73.8/bl, declining from $74.3/bl the previous week.
This was despite the present concerns with uncertainty about the implementation of further American-imposed sanctions on OPEC member, Iran. The US is set to decide on whether to abandon the 2015 Iran nuclear accord and reimpose sanctions by 12 May. Prices are 8.9% above last month ($67.7/bl).

API 2 Coal

API 2 coal prices increased 1.2% last week, averaging $84.4/t (up from $83.4/t). Prices reached a two-month high of $85.8/t on 1 May.
Despite low European coal demand, market demand has stemmed from South-East Asia, with 10 out of the 24 South Korean nuclear power stations still currently offline. Future prices may be impacted by forecasts of declining Chinese imports due to the possible impact of coal import restrictions. API 2 coal prices remain higher compared last month ($76.0/t), up 11.1%.

EU ETS Carbon

EU ETS carbon prices grew 0.8% to average €13.3/t last week. Prices were supported by rising European carbon emissions across the week. However, weak auction trading capped gains. EUA prices are currently 2.3% above prices from last month (€13.0/t).

NBP Gas

Near-term

Day-ahead gas lost the previous week’s gains, falling 3.2%, down 1.7p/th to 51.8p/th. Day-ahead gas dropped with warmer temperatures leading to reduced demand. Unconfirmed reports of the arrival of the Qatari LNG tanker, Aamira, into the South Hook LNG terminal would have added to the bearish fundamentals.
Despite last week’s declining crude oil prices, generally month-ahead contracts have recently gained support from bullish oil prices. July 18 gas lost 0.7% to 51.2p/th (down from 51.6p/th). The contract is 14.6% higher than in the same period last month (44.7p/th).

Seasonal

Nearly all seasonal gas contracts continued to experience bullish growth, gaining 0.6% on average.
Summer 19 gas was the exception, losing 1.3% to 44.4p/th (down from 49.5p/th). Winter 18 gas gained 0.2% to 58.0p/th and winter 20 gas reached 49.5/th, up 1.9% from last week and 5.0% from the same period last month.

Annual October 18

Annual October 18 gas declined 0.5% to 51.2p/th. The contract is 9.5% above its price the same time last month (46.8p/th) and is 23.1% higher than the same time last year (41.6p/th).

Baseload Power

Near-term

The majority of near-term baseload power contracts fell last week. Day-ahead power lost 1.8% to £51.6/MWh, down from £52.5/MWh the previous week.
Power contracts responded to milder temperatures leading to reduced demand, solar generation ascended last week. However lower prices were pegged up by a lower wind generation.

Seasonal

All seasonal baseload power prices climbed last week, increasing on average by 0.9%.
Winter 18 power continued to grow, reaching a fresh three-year price high at £56.3/MWh, an increase of 0.6% from the previous week. Winter 18 is up 7.4% from last month (up from £52.5/MWh).
Summer 19 saw the largest growth last week, rising 1.2% to £45.8/MWh. This is up from £36.9/MWh last year (an increase of 24.0%).

Annual October 18

The annual October 18 power contract increased 0.9% to £51.0/MWh (up from £50.6/MWh). This is an increase of £3.4/MWh (7.2%) from the same period last month, and an increase of 27.9% from 2017 when it was £39.9/MWh.