WEEKLY ENERGY MARKET UPDATE - 16/08/2021

16 Aug 2021

Home WEEKLY ENERGY MARKET UPDATE - 16/08/2021

Last Week’s Pricing & Commentary

Commodity

Unit

Settlement Price

Change Since 01 Jan 21

Change on Week

UK Gas NBP Sep 21

p/therm

110.89

164.65%

2.64%

UK Gas NBP Winter 21

p/therm

114.32

122.63%

4.75%

UK Gas NBP Summer 22

p/therm

72.30

82.11%

7.94%

UK Power Base Sep 21

£/MWh

107.36

110.63%

2.36%

UK Power Base Winter 21

£/MWh

112.17

93.73%

4.59%

UK Power Base Summer 22

£/MWh

77.98

64.68%

5.49%

Carbon EUA Dec 21

€/tonne

55.38

69.25%

-2.26%

Carbon UKA Dec 21

£/tonne

48.20

6.52%

-0.10%

Oil Brent Crude Oct 21

$/barrel

70.59

38.28%

-0.16%

 

The energy complex remained volatile last week as liquidity struggled with many traders away from their desks during the holiday season but one consistent remained in the front 9 months of gas and power shifting higher over the course of the week as fresh highs were set. Despite a slight dip on Monday that came about as prices seemed to correct themselves and end the day in line with the previous week’s settlement, contracts at the front of the curve spent most of the week lifting higher. Continued disruption to Russian supply to Europe helped to support pricing as did another unplanned outage at Norway’s Troll field whilst prices remained well supported at the prompt end of the market with high prints above £150/MWh in the traded markets during the morning peak on Tuesday as low wind continues to keep the system tight. Wednesday saw the front month gas contract once again hit new all-time highs, this time with the Sep 21 NBP contract reaching 116.35p/therm as fears of tightness across the Winter are still forefront in trader’s thoughts. Both gas and power traded lower on Friday after a strong week that saw gains across the board as traders looked to take profit ahead of the weekend amidst low liquidity. Higher levels of wind also helped by providing addition supply into the grid and reducing the amount of gas burn generation needed. This month has seen a step up of injections as spot market prices trade at a discount to Sep and other months across the winter period. Whilst positivity can be drawn from this, it doesn’t detract from current fundamentals still pointing to Europe being short gas over the coming winter. Winter 21 NBP and baseload gained an impressive 5.19p/therm and £4.93/MWh over the course of the week despite weakness at the very start of the week and on Friday.

Carbon largely followed gas last week until Thursday where the losses outpaced the other commodity, although it was clear that the contract was testing €58/tonne and ultimately failed to convincingly break though, triggering selling. Dec 21 EUAs settled €1.28/tonne lower on the week whilst UKAs managed to roughly hold their level, settling just £0.05/tonne lower on the week. Delta variant impacts and rising cases across Asia hampered gains in oil where the Oct 21 Brent contract suffered a loss of $0.11/barrel by the end of the week.

Last Week's Average Generation Stack

 

Gas

Wind

Solar

Hydro

Nuclear

Imports & Exports

Biomass

Pumped Storage

Coal

GW

9.06

7.85

4.83

0.14

4.11

4.45

1.95

0.01

0.60

%

27.46

23.79

14.64

0.41

12.45

13.48

5.92

0.02

1.82

This Morning's View

Higher wind output has left the system long this morning as reliance on gas burn generation wanes however this hasn’t been enough to push prices lower with the front of the gas curve shooting higher. Sep 21 NBP is up 5.61p/therm, hoisting carbon with it. Dec 21 EUA’s are up €1.84/tonne, more than reversing last week’s losses already. Oil points the other way, continuing to struggle as Chinese demand is impacted by Covid, seeing the Oct 21 Brent contract $1.04/barrel below settlement.

Market Report Disclaimer 

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