Weekly Energy Market Update - 07/06/2021

7 Jun 2021

Home Weekly Energy Market Update - 07/06/2021

Last Week’s Pricing & Commentary

Commodity

Unit

Settlement Price

Change Since 01 Jan 21

Change on Week

UK Gas NBP Jul 21

p/therm

62.71

52.02%

3.35%

UK Gas NBP Winter 21

p/therm

70.72

37.71%

2.62%

UK Gas NBP Summer 22

p/therm

46.34

16.72%

-1.93%

UK Power Base Jul 21

£/MWh

73.25

43.32%

-0.93%

UK Power Base Winter 21

£/MWh

80.71

39.40%

0.18%

UK Power Base Summer 22

£/MWh

56.81

19.98%

-2.34%

Carbon EUA Dec 21

€/tonne

49.97

52.72%

-2.08%

Carbon UKA Dec 21

£/tonne

45.75

1.10%

-5.67%

Oil Brent Crude Aug 21

$/barrel

71.89

40.00%

4.61%

Last week saw UK gas and power push higher on a short trading week thanks to the bank holiday. Most of this strength was due to a gap higher on Tuesday as front-month NBP gained c. 3.10p/therm despite somewhat comfortable prompt fundamentals with temperatures well above seasonal norms and storage injections underway across Europe. The rest of the week was spent drifting lower from this high open as price action seemed to follow warmer weather, a strong roster of LNG arrivals to the UK, and losses in carbon contracts. The race is still on however to fill European storage levels, which still sit relatively depleted for the time of year ahead of Winter and could continue to support pricing through the summer injection season. Further down the curve Winter 21 tracked the front of the curve, gaining 1.81p/therm, however bullish sentiment faded by Summer 22 which dropped 0.91p/therm on the week with Tuesday’s move higher not enough to fend off losses. Power markets did not move as closely with gas markets last week with front month and Summer 22 baseload posting £0.69/MWh and £1.36/MWh losses whilst Winter 21 popped a little higher. At the prompt end of the power market pricing remained relatively elevated as a lack of wind and strength in European pricing supported the traded and imbalance markets.

Carbon markets posted gains in the first few days of trading with Dec 21 EUAs reaching a high of €53.30/tonne on Tuesday before the rest of the week was spent sliding lower to close below €50/tonne. UKAs saw four consecutive days of losses, particularly pronounced on Wednesday, the day of the second UK ETS auction, which cleared at £44.75/tonne and coincided with an EUA auction that saw over 8.6 million credits enter the UK & EU schemes on a single day. Brent markets continued to trek higher with the August contract first pushing above $70/barrel then quickly trading above $71/barrel. Strength was linked to OPEC+ showing a strong agreement amongst members to only continue to add supply at a slow rate in line with increased demand rather than flooding the market as well as crude stockpile drawdowns and slowing Iranian nuclear deal talks.

Last Week’s Average Generation Stack

 

Gas

Wind

Solar

Hydro

Nuclear

Imports & Exports

Biomass

Pumped Storage

Coal

GW

10.55

4.40

6.49

0.11

5.54

3.19

2.38

0.01

0.00

%

32.28

13.47

19.85

0.34

16.96

9.77

7.29

0.03

0.00

This Morning’s View

This morning has seen gas markets initially open weaker before reversing and now pushing above settlement with Jul 21 NBP up 0.33p/therm despite the NTS forecast over 26 mcm long. This length in the NTS could see prompt gas pricing somewhat pressured, although, with continued low wind output, gas for power demand could remain elevated and put gas at the margin for power pricing. Carbon markets were initially weak, although market participants are struggling to get market access this morning due to exchange failures. Brent markets are also trading lower with Aug 21 $0.47/barrel below settlement, perhaps linked to profit-taking after the contract’s gains last week.

 

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