Weekly Energy Market Update - 02/08/2021

2 Aug 2021

Home Weekly Energy Market Update - 02/08/2021

Last Week’s Pricing & Commentary

Commodity

Unit

Settlement Price

Change Since 01 Jan 21

Change on Week

UK Gas NBP Sep 21

p/therm

103.75

147.61%

15.30%

UK Gas NBP Winter 21

p/therm

103.24

101.06%

11.13%

UK Gas NBP Summer 22

p/therm

60.50

52.39%

7.94%

UK Power Base Sep 21

£/MWh

101.55

99.23%

12.58%

UK Power Base Winter 21

£/MWh

102.57

77.15%

8.66%

UK Power Base Summer 22

£/MWh

66.37

40.17%

6.29%

Carbon EUA Dec 21

€/tonne

53.33

62.99%

4.79%

Carbon UKA Dec 21

£/tonne

43.98

-2.81%

3.73%

Oil Brent Crude Oct 21

$/barrel

75.41

47.72%

2.68%

Last week marked another extremely bullish week for gas, pulling the rest of the complex with it whilst oil grappled with COVID-19 variant impacts and supply fundamentals. The week saw Aug 21 NBP expire and Sep 21 NBP become the new front-month contract, both topping 100p/therm in quite incredible moves and often trading at a premium to Winter 21 NBP, a fact not many would have bet on at the start of the year. Aug 21 NBP posted a settlement-to-settlement gain of 4.55p/therm with the market favouring the bullish factors of a worsening storage backdrop as the high price environment struggles to see many injections as well as a meagre roster of LNG arrivals. Further providing support was outages at Norway’s Troll field that saw Langeled injections fall significantly with Gassco data suggesting the field will be fully online again at the start of next month. Come Tuesday, further bullish fundamentals encouraged prices higher with wind output still low and solar levels failing to reach recent output, heaping further pressure on gas burn generation making injection at any significant level less likely. Additionally, news broke that Gazprom chose not to purchase any Ukrainian interruptible capacity for August helped to keep the bid in the market. Aug 21 NBP settled comfortably above 100p/therm before expiring and Sep 21 quickly rose higher, ending the week 13.77p/therm higher, settling 0.51p/therm above Winter 21 NBP. Power prices were no different, riding the wave higher led by gas with Sep 21 baseload jumping £11.35/MWh higher on the week, breaching £100/MWh but settling just below Winter 21 baseload, which managed £102.57/MWh.

Volatility ensued on Friday with profit taking early on although bids soon crept into the market during the afternoon and contracts settled a little below the previous session. Dec 21 EUA’s and UKA’s found ample support through gas prices with both contracts finishing the week €2.44/tonne and £1.58/tonne up, respectively. Prices dipped initially at the start of the week as market participants anxiously awaited the Polish and UK carbon auctions on Wednesday. The Polish auction added 2.5 million EUAs into circulation and later the 6th UK ETS auction added just over 6 million UKA’s to the market. The markets managed to absorb this supply relatively well. Oct 21 Brent rose $1.97/barrel on the week, ultimately finding strength in tight supply and some stock drawdowns despite some days of rises and worries around COVID-19 variant impacts.


Last Week’s Average Generation Stack

 

Gas

Wind

Solar

Hydro

Nuclear

Imports & Exports

Biomass

Pumped Storage

Coal

GW

11.92

5.20

4.58

0.08

3.59

4.40

2.60

0.07

0.75

%

35.91

15.67

13.80

0.24

10.83

13.24

7.84

0.21

2.26

This Morning’s View

Sep 21 NBP has shot out of the blocks this morning, rising 4.19p/therm already with gains seen through to Winter 21 NBP which is up 2.76p/therm in comparison. That being said, an indication that Russia could flow additional volumes over the winter could see prices tumbling as this would see Europe well supplied with gas. Dec 21 EUA’s have been dragged higher, up €1.06/tonne currently whilst power has yet to really get going. Oct 21 Brent has seen prices reverse, currently $0.68/barrel below settlement with demand worries mounting as a report shows a drop in factory activity growth in China. 

 

 

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