WEEKLY MARKET ENERGY UPDATE - 05/09/2022

Last Week’s Pricing & Commentary  

Energy markets continued their volatile nature last week as the market saw a mass sell off through pricing curves. This began with the UK market selling off after the long bank holiday weekend, dropping 180p/therm on front month NBP contracts on Tuesday. The market then sold off hard again on Friday, providing short term welcome relief to consumers across Europe. Power closing the week at £410/MWh for Oct-22 contracts and £630/MWh for Winter-22 contracts, down £231/MWh and £221/MWh respectively. Gas saw more of a decline, settling the week down 293p/therm and 301.75p/therm for Oct-22 and Winter-22 contracts. This relief was short lived as Gazprom then announced the suspension of Nord Stream 1 flows indefinitely at 17:30pm on Friday, citing the impact that western sanctions have had on turbine maintenance. UKAs remained strong through the power and gas volatility as the price higher than EUAs. EUAs saw a decline of €12.42/tonne with Europe battling the impact of high prices on demand from industrial consumers. Brent continued to decline across the week despite the possibility of price caps on Russian oil exports, dropping $6/barrel. Wind generation picked up across the week, helping to ease the pressure seen on gas for power generation over much of the summer and hitting highs of 13GW over Sunday evening.

Last Week’s Average Generation Stack

This Morning’s View

The market roofs on the open, as bulls take back control of pricing. The moves come on the back of announcements at 17:30 on Friday from Gazprom that all flows through Nord Stream 1 would stop indefinitely as imposed sanctions impact its ability to manage maintenance. These announcements came swiftly after an agreement between western nations amongst a way to cap prices of Russian oil. NBP prices are up 32% across the pricing curves, following moves in TTF. NBP winter-22 contracts are now trading back up at 695.75p/therm. Power expected to trade up with moves in gas. The NTS is forecast 14mcm long as LNG flows into the UK remain strong and wind power generated 13GW during points overnight.

Wider news

Kremlin blames Europe for Nord Stream 1 halt, saying sanctions hamper maintenance

Freeze in energy bills expected from new Prime Minister

Ofgem picks up preferred OFTO bidder for 'world's largest' offshore wind farm

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