Last Week’s Pricing & Commentary
|
Commodity |
Unit |
Settlement Price |
Change Since 01 Jan 22 |
Change on Week |
E&S Desk View |
|
UK Gas NBP Jan 23 |
p/therm |
336.31 |
119.64% |
3.81% |
Very significant bullish gains at the beginning of last week, but saw bearish reversals towards the end of the week. |
|
UK Gas NBP Summer 23 |
p/therm |
332.21 |
96.12% |
7.15% |
|
|
UK Gas NBP Winter 23 |
p/therm |
342.38 |
327.81% |
5.49% |
|
|
UK Power Base Jan 22 |
£/MWh |
532.32 |
270.75% |
17.79% |
|
|
UK Power Base Summer 23 |
£/MWh |
302.35 |
87.33% |
11.31% |
|
|
UK Power Base Winter 23 |
£/MWh |
335.25 |
277.23% |
10.87% |
|
|
Carbon EUA Dec 22 |
€/tonne |
87.67 |
9.86% |
12.01% |
|
|
Carbon UKA Dec 22 |
£/tonne |
79.18 |
6.14% |
13.47% |
|
|
Oil Brent Crude Feb 23 |
$/barrel |
85.57 |
12.83% |
0.39% |
Last week saw the market begin very bullishly as a result of significant emerging weather fundamentals, namely: cold temperatures and low wind generation (20% below seasonal norms). This resulted in some highly volatile price action along the curve, particularly in front month contracts, with Jan 23 NBP experiencing a 71p trading range last Wednesday. As the market became more comfortable with the risk that the cold patch represented to supply and storage levels, the extortionate risk premiums began to get priced out of the curve. However, DA and prompt contracts remain supported due to the increased gas for power and gas for heating demand, coupled with the fact that electricity prices in the UK need to remain relatively competitive with French peak prices, even in the face of continued nuclear uncertainty. The bullish uptick in British gas prices last week resulted in an additional 2 laden LNG vessels becoming bound for British shores, bringing the total up to 18 by the 19th of December. The cold weather is set to continue throughout weeks 49 and 50, and the power market has seen its first medium-high triad warning of the winter today to open the week. Carbon markets remained strong throughout the week gaining €5.80/tonne and £3.23/tonne for EUA’s (up 12.01% over the course of the week) and UKA’s (up 13.47% over the week) respectively. Oil markets however, remained bearish as increasing covid-19 cases in China weaken demand outlooks. Pricing has now all but erased it’s gains for the year with levels not seen since December-2021.
Last Week’s Average Generation Stack
|
Gas |
Wind |
Solar |
Hydro |
Nuclear |
Imports & Exports |
Biomass |
Pumped Storage |
Coal |
|
|
GW |
19.80 |
5.48 |
0.65 |
0.65 |
4.39 |
3.22 |
2.48 |
0.15 |
1.18 |
|
% |
52.12 |
14.42 |
1.70 |
1.72 |
11.55 |
8.47 |
6.52 |
0.39 |
3.11 |
This Morning’s View
Trafigura have provided the German government with a $3 billion loan to help with the purchase of LNG, indicating just how central the super chilled fuel is set to become to the European energy mix. Secondly, a cap of $60/barrel has now been imposed on Russia for seaborne crude, which is $10/barrel below where Urals is currently trading. Russia has already said it wont export to any nation that tries to impose this cap which could lead to a shortness of supply and therefore bullish buying.
Wider news
UAE, Ukraine to start talks on bilateral trade deal | Reuters
Exclusive: China may announce 10 new COVID easing steps on Weds -sources | Reuters
Raheem Sterling leaves England World Cup squad after armed break-in at family home - BBC Sport
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