Weekly Energy Market Update - 04/05/2021

4 May 2021

Home Weekly Energy Market Update - 04/05/2021

Last Week’s Pricing & Commentary

Commodity

Unit

Settlement Price

Change Since 01 Jan 21

Change on Week

UK Gas NBP Jun 21

p/therm

60.24

40.58%

14.90%

UK Gas NBP Winter 21

p/therm

65.87

28.28%

12.12%

UK Gas NBP Summer 22

p/therm

46.25

16.50%

7.56%

UK Power Base Jun 21

£/MWh

69.68

34.31%

8.79%

UK Power Base Winter 21

£/MWh

76.01

31.28%

8.08%

UK Power Base Summer 22

£/MWh

55.62

17.47%

4.92%

Carbon EUA Dec 21

€/tonne

49.42

51.13%

4.81%

Oil Brent Crude Jul 21

$/barrel

67.77

32.36%

3.67%

A strong week across the energy complex with May 21 NBP and baseload contracts expiring and Jun 21 taking over as the front-month contract. In a week of low wind output, worries over the slow pace of storage injections, as the injection season gets well underway, have lifted prices along the curve. Jun 21 NBP gained 7.81p/therm on the week with the contract only trading at a slight discount to Winter 21 NBP currently. Winter 21 NBP is trading c. 5.5p/therm above the Jun 21 price and gained 7.12p/therm last week whereas Summer 22 NBP still rose by 3.25p/therm. Power moved in line with gas prices, moving higher along the curve with increases dropping from Summer 22 onwards. Jun 21, Winter 21, and Summer 22 baseload rose by £5.63/MWh, £5.68/MWh, and £2.61/MWh, respectively.

Prices across the gas and power curves were exacerbated by an unexpected outage in Norwegian production on Friday which saw volumes fall during the day and by generally strong carbon, often providing support as the commodity continues its upward trajectory. Dec 21 EUAs climbed €2.27/tonne on the week, eyeing a key technical level of €50/tonne. Many thought the contract could dip following the end of the Apr ETS compliance round, but the contract bounded higher. Brent prices managed to secure an increase last week despite the worsening COVID-19 situation across India. Jul 21 Brent rose by $2.40/barrel on the week, edging away from the mid $60’s closer to $70/barrel. The contract found support from stable vaccine rollouts in many countries, surprise drawdowns on U.S inventories, a weaker dollar, and some positive U.S economic data helping the mid-term case for oil demand.
  
Last Week’s Average Generation Stack

 

Gas

Wind

Solar

Hydro

Nuclear

Imports & Exports

Biomass

Pumped Storage

Coal

GW

15.26

5.98

3.93

0.18

4.56

2.83

2.67

0.03

0.06

%

42.98

16.83

11.08

0.50

12.84

7.98

7.51

0.09

0.18

This Morning’s View

A very strong start to this morning for gas with contracts along the curve racing higher. Jun 21 NBP is up 1.61p/therm although down from early highs 2.48p/therm above the previous day’s settlement. Gains were consistent along the curve through to Summer 22 NBP early on but have since dropped off with Summer up 0.65p/therm currently. Early strength is attributed to a short system, May 21 expiring and Jun 21 becoming the front-month contract, little being injected into storage and demand still above seasonal norms with temperatures still cool as we enter May. Prices could be pressured by forecasts of temperatures moving back towards seasonal norms in the next couple of weeks and 9 LNG cargoes expected into UK shores over the next two weeks. Dec 21 EUAs are up €0.16/tonne, dragged higher by strength in gas initially, with the contract hitting a high of €50.05p/therm already, although unable to hold above €50/tonne currently. Oil has found support from general demand optimism around Europe whilst some U.S. states reducing lockdown restrictions have further added support for the commodity. Jul 21 Brent is up $0.72/barrel at the time of writing although concerns continue over COVID-19 impacts in India with record cases still being reported which could keep a lid on gains. 
 

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