Weekly Energy Market Update - 07/12/2020

7 Dec 2020

Home Weekly Energy Market Update - 07/12/2020

Last Week’s Pricing & Commentary

Commodity

Unit

Settlement Price

Change Since 01 Jan 20

Change on Week

UK Gas NBP Jan 21

p/therm

42.57

27.07%

-1.46%

UK Gas NBP Summer 21

p/therm

33.64

-11.94%

-1.78%

UK Gas NBP Winter 21

p/therm

42.53

-2.11%

-0.97%

UK Power Base Jan 21

£/MWh

54.53

22.65%

0.59%

UK Power Base Summer 21

£/MWh

44.68

5.25%

0.11%

UK Power Base Winter 21

£/MWh

50.80

5.33%

-0.39%

Carbon EUA Dec 20

€/tonne

30.11

22.25%

6.21%

Oil Brent Crude Feb 21

$/barrel

49.25

-20.26%

2.82%

Last week saw mixed performance across the energy complex. The NBP curve was well supported at the beginning of the week with prices holding momentum above the 42.57p/therm settlement price, though high LNG flows saw these gains being reversed on Thursday. News of Norwegian strike threats on Friday however saw these losses largely recovered. NBP demand improved across the week with a peak of 29.9mcm above seasonal norms with wind outturn averaging around 5GW. Temperature forecasts which point towards warmer conditions from mid-December weighed on the pricing curve, Jan 21 NBP declined 0.63p/therm followed by losses of 0.61p/therm and 0.42p/therm on the Summer 21 and Winter 21 contracts, respectively. Front month UK Baseload gained £0.32/MWh across the week despite weakness feeding through from a declining NBP.

National Grid warned of a supply risk last Sunday, prompting power prices to reach a 4-year high, this was unusual given that demand for power on the weekend is typically lower in offices/industries, indicating greater supply risk to come especially as the Winter approaches. National Grid cited that the margin between power supply and demand is the narrowest it has been in the UK for 4-years, prompting further supply risk concerns. Baseload Summer 21 gained £0.05/MWh whilst the Winter 21 contract slipped £0.20/MWh on NBP losses. Dec 20 EUAs gained €1.76/tonne above settlement as prices broke above the €25.50-27/tonne range, an area of importance highlighted in previous market reports. Consequently, prices pushed higher but have reached a key resistance at €30/tonne which may see a short-term reversal. Elsewhere Feb 21 Brent gained $1.35/barrel as the commodity was kept upbeat on vaccine potential combined with expectations of OPEC to agree on supply cut extensions. 

Last Week’s Average Generation Stack

 

Gas

Wind

Solar

Hydro

Nuclear

Imports & Exports

Biomass

Pumped Storage

Coal

GW

20.10

7.37

1.42

0.56

6.38

2.34

3.13

0.15

1.30

%

47.01

17.24

3.33

1.31

14.92

5.47

7.33

0.35

3.04

 

This Morning's View

Jan 21 NBP is up down 0.78p/therm amid warmer temperature forecasts above seasonal norms, estimated to arrive by mid-December. The Summer 21 and Winter 21 contracts have also declined as a result, by 0.64p/therm and 0.28p/therm respectively. Dec 20 EUAs have retraced by €0.52/tonne, with prices trading below €30/tonne. Price action observation has shown multiple rejections from €30/tonne, often resulting in prices slipping towards €26/tonne. If bearish momentum continues to persist, we may see this being repeated. Feb 21 Brent is down $0.32/barrel, though the recent supply cut extension agreement by OPEC is likely to see prices remaining supported overall unless non-OPEC members decide to increase oil production.

 

Market Report Disclaimer 
The information provided in this market report is intended for Brook Green Supply Limited clients and subscribers only. The content is provided and intended for general information purposes only. All pricing stated in this market report is indicative, at the time of writing, and may not be attained in trading at any time after report publication. For the avoidance of doubt, Brook Green Supply Limited does not represent or endorse the accuracy or reliability of any of the information or content, expressed or implied, nor are we acting in any capacity as a fiduciary to you. Recipients of this market report must not rely on the information and are advised to take any necessary steps to validate such information, independently assess the economic risks and merits and make your own assessment, or appoint appropriate advisors, on any legal or tax consequences before acting upon it. Under no circumstances will Brook Green Supply Limited have any liability for any loss or damage caused by dependence on any information contained within this market report. Please contact our execution and solutions desk via tradingdesk@brookgreensupply.com for further information. 

Be notified when we add a new articles