Weekly Energy Market Update - 07/02/2022

7 Feb 2022

Home Weekly Energy Market Update - 07/02/2022

 

Last Week’s Pricing & Commentary  

Commodity

 

Unit

 

Settlement Price

 

Change Since 01 Jan 22

 

Change on Week

UK Gas NBP Mar 22

p/therm

200.49

20.04%

-8.80%

UK Gas NBP Summer 22

p/therm

199.18

29.33%

-6.88%

UK Gas NBP Winter 22

p/therm

207.53

28.59%

-6.60%

UK Power Base Mar 22

£/MWh

185.42

6.58%

-10.70%

UK Power Base Summer 22

£/MWh

184.60

24.53%

-5.51%

UK Power Base Winter 22

£/MWh

194.96

20.80%

-4.66%

Carbon EUA Dec 22

€/tonne

96.45

20.86%

8.10%

Carbon UKA Dec 22

£/tonne

87.92

17.86%

3.80%

Oil Brent Crude Apr 22

$/barrel

93.27

19.41%

5.37%

Early last week brought sell offs for gas markets with front month NBP giving back close to 40p/therm by Tuesday’s settlement. Weakness looked linked to warmer temperatures forecast for the beginning of February along with higher Russian flows to Europe for the start of February and a healthy roster of LNG vessels expected to reach UK and EU shores over the first half of February. However, the rest of the week saw price action reverse with rallies on Thursday and Friday limiting weekly losses to 19.34p/therm for front month. Strength was linked to lower Russian flows as well as climbing Asian LNG spot pricing, which could limit the flow to Europe over the coming weeks. Seasonal contracts showed similar patterns and ultimately dropped 14.71p/therm and 14.65p/therm on the week. Power markets tracked losses in gas with front month, Summer 22 and Winter 22 UK baseload dropping £22.22/MWh, £10.76/MWh, and £9.5/MWh. Prompt markets were kept in check by lower demand with higher temperatures and stronger wind output.

Carbon markets started the week with losses before a failed auction on Wednesday spurred on buying and price action pushing through technical levels that drew in more buyers still. Dec 22 EUAs gained over €4.50/tonne on Wednesday alone. Strength continued to end the of the week with the contract breaking new all-time highs day on day and settling €7.23/tonne above the prior week. UK carbon markets were bullish too, but less so than its EU counterpart, with Dec 22 UKAs gaining £3.22/tonne on the week and the UKA/EUA premium being trimmed a little to just over £6/tonne. Brent markets were kept in a relatively tight range for the first half of the week by OPEC+ continuing to stick to the planned quotas, struggles to match current output quotas, profit taking around the $90/barrel level and weak US payroll data. The back end of the week saw strength however as traders focused on a tight 2022 in terms of supply/demand. The Apr 22 contract gained $4.75/barrel.

Last Week’s Average Generation Stack

 

Gas

Wind

Solar

Hydro

Nuclear

Imports & Exports

Biomass

Pumped Storage

Coal

GW

10.51

16.17

1.02

0.46

5.24

3.12

2.28

0.11

0.89

%

26.40

40.64

2.56

1.16

13.17

7.84

5.72

0.27

2.2

This Morning’s View

This morning has seen gas markets quickly reverse once again with front month NBP down 13p/therm and front month TTF down €5.28/MWh. Weakness looks linked to clement temperature and a continued windy start to February forecast. Some pressure may also be coming from Macron’s announcement of peace-keeping talks with Russia. The NTS is forecast just 0.1mcm long with stronger LDZ offtake helping to push demand closer to seasonal normal, although wind output forecast to rise to 15GW by the evening peak may help to lengthen the system. Elsewhere in the market, EUAs have also sold off with the Dec 22 contract down €1.65/tonne and Brent gives up gains with the Apr22 contract down $0.65/barrel on improving sentiment around US-Iranian talks that could see more supply come to market.

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