Weekly Energy Market Update - 02/11/2020

3 Nov 2020

Home Weekly Energy Market Update - 02/11/2020

Last Week’s Pricing & Commentary

Commodity

Unit

Settlement Price

Change Since 01 Jan 20

Change on Week

UK Gas NBP Dec 20

p/therm

41.50

23.88%

-1.80%

UK Gas NBP Summer 21

p/therm

33.33

-12.75%

-7.67%

UK Gas NBP Winter 21

p/therm

41.36

-4.82%

-6.54%

UK Power Base Dec 20

£/MWh

42.13

-5.24%

-16.54%

UK Power Base Summer 21

£/MWh

44.93

5.84%

2.77%

UK Power Base Winter 21

£/MWh

47.88

-0.73%

-3.95%

Carbon EUA Dec 20

€/tonne

23.71

-3.74%

-6.02%

Oil Brent Crude Jan 21

$/barrel

37.94

-38.57%

-9.30%

 

Last week saw heavy selling pressure across the energy complex on multiple factors including, high temperatures & wind output, US elections risks, European/UK lockdowns, lower demand, and high LNG arrival volumes. Dec 20 NBP declined 0.76 p/therm followed by greater losses in Summer 21 and Winter 21 contracts of 2.77p/therm and 2.90p/therm respectively across the week. Front month NBP declined day on day from last week’s open at 46.26p/therm with losses even more pronounced towards the end of the week and over the weekend, prices fell 1.47p/therm on Friday and 1.87p/therm on weekend trading amid higher wind generation levels, reaching 13.4 GW. There are 5 LNG cargoes expected to arrive in Britain this week, which is only 2 less than Octobers total delivery, thus illustrating strong LNG flows when compared to surrounding hubs. As a result, both front and later dated NBP contracts have been supressed on prospects of greater LNG flows throughout November. UK Baseload suffered, with Dec 20 baseload dropping significantly by £8.35/MWh amid a weaker energy complex and higher wind outturn. Similarly, to NBP prices, front month prices elsewhere in the complex have declined day on day throughout the week since last week’s open at €50.48/tonne. Dec 20 EUAs slipped €1.52/tonne, prices failed to maintain momentum above €25/tonne and succumbed to selling pressure. Price action on Wednesday saw prices fall below the lows of previous daily candles, prompting weakness for the day ahead sessions. Elsewhere Jan 21 Brent fell $3.89/barrel on lack of urgency from OPEC members to extend oil output cuts, no progress on US stimulus packages and rampant COVID-19 cases that has sparked fresh national lockdowns across Europe and the UK.

Last Week’s Average Generation Stack

 

Gas

Wind

Solar

Hydro

Nuclear

Imports & Exports

Biomass

Pumped Storage

Coal

GW

10.06

12.79

1.52

0.69

6.16

4.01

2.05

0.23

0.22

%

26.66

33.89

4.03

1.84

16.34

10.64

5.43

0.60

0.58

This Morning’s View

The energy complex has remained under pressure this morning. Dec 20 NBP is down 1.65p/therm as wind output is expected to remain at 13.4 GW today against the average of 10.06 GW recorded last week, in addition to high volumes of expected LNG arrivals into Britain this week. Despite this, wind outturn is forecast to fall and average 6 GW this week which could potentially cushion weakness in NBP prices though high volumes of LNG arrivals will likely supress any meaningful upside attempts. Dec 20 EUAs are down €0.46/tonne, prices are likely to test the €23/tonne support as the energy complex remains weak across the board before US elections. Jan 21 Brent is down $0.83/barrel before the presidential election tomorrow.

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