Weekly Energy Market Update - 29/03/2021

29 Mar 2021

Home Weekly Energy Market Update - 29/03/2021

Commodity

Unit

Settlement Price

Change Since 01 Jan 21

Change on Week

UK Gas NBP Apr 21

p/therm

48.39

-1.45%

11.01%

UK Gas NBP Summer 21

p/therm

46.06

5.89%

7.49%

UK Gas NBP Winter 21

p/therm

54.28

5.71%

2.80%

UK Power Base Apr 21

£/MWh

57.21

4.47%

4.78%

UK Power Base Summer 21

£/MWh

56.18

7.07%

4.72%

UK Power Base Winter 21

£/MWh

64.85

12.00%

1.63%

Carbon EUA Dec 21

€/tonne

41.73

27.61%

-0.17%

Oil Brent Crude May 21

$/barrel

64.57

25.35%

0.06%

A week of strength across gas and power contracts was fuelled by the Suez Canal blockage caused by the Ever Given, that had run aground on Tuesday amid high winds and a sandstorm that affected visibility. When prices initially jolted higher, many traders were left scratching their heads as a backdrop of bearish fundamentals remained prevalent. Length in the NTS, swelling wind generation, demand below seasonal norms and warmer weather all contributed to most analyst’s expecting prices to lower over the course of the week. However, the Suez blockage, holding up an estimated $9.6bn of goods per day, caused prices to jump within week. Apr 21 NBP rose 4.80p/therm on the week, leaving the contract trading at a c. 2p/therm premium over the Summer 21 contract. Summer 21 and Winter 21 NBP increased by 3.21p/therm and 1.48p/therm over the week, with gains led by strength in the front month contract.

Power prices were dulled by flat carbon pricing as Apr 21, Summer 21 and Winter 21 baseload contracts rose by £2.61/MWh, £2.53/MWh, and £1.04/MWh, respectively. Dec 21 EUAs endured a volatile week, trading in c. €2 ranges often and even dipping below €40/tonne on Thursday before quickly shifting back above the key level. Third COVID waves across Europe, slow vaccine rollouts and increasing restrictions played a part in weakness, raising concerns over the expected demand recovery timeline. EUAs did end the week strongly though, possibly due to speculative dip buying as the Dec contract rose over €1/tonne on Friday to ensure the contract finished the week sideways. Brent prices grappled with similar coronavirus impacts with the Suez blockage causing opposing pressure. This often saw the May 21 Brent contract in c. $4/barrel ranges. May 21 Brent eventually settled the week just $0.04/barrel higher, struggling to find sustained support either way.

Last Week’s Average Generation Stack

 

Gas

Wind

Solar

Hydro

Nuclear

Imports & Exports

Biomass

Pumped Storage

Coal

GW

7.96

12.94

4.01

0.42

4.90

2.20

3.04

0.01

0.05

%

22.41

36.43

11.28

1.18

13.80

6.20

8.56

0.02

0.1

 

This Morning's View

A weak start to the day with news breaking early this morning to confirm the Ever Given has been partially dislodged, meaning the ship can now be moved along to a waiting area in a wider section of the canal, allowing some 367 vessels to pass by. Apr 21 NBP is down 1.46p/therm already, giving back some of last week’s gains whilst contracts along the curve begin to show signs of moving similarly. Brent quickly dropped below settlement following the news, with May 21 Brent sitting $0.44/barrel below settlement currently, although this level is off the morning highs. The contract could further be impacted once the Ever Given is moved to the waiting area, fully unblocking the canal. Dec 21 EUAs sit €0.66/tonne below settlement with weakness from the wider energy complex pressuring the contract. High wind output, warmer temperatures and solar output expected to rise this week could see bearishness persist across gas and power contracts.

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