Weekly Energy Market Update: 08.03.2021

8 Mar 2021

Home Weekly Energy Market Update: 08.03.2021

Last Week’s Pricing & Commentary

Commodity

Unit

Settlement Price

Change Since 01 Jan 21

Change on Week

UK Gas NBP Apr 21

p/therm

41.25

-15.99%

2.61%

UK Gas NBP Summer 21

p/therm

40.05

-7.93%

1.91%

UK Gas NBP Winter 21

p/therm

50.79

-1.09%

3.21%

UK Power Base Apr 21

£/MWh

52.56

-4.02%

2.48%

UK Power Base Summer 21

£/MWh

51.43

-1.98%

3.84%

UK Power Base Winter 21

£/MWh

61.19

5.68%

4.28%

Carbon EUA Dec 21

€/tonne

39.02

19.33%

4.22%

Oil Brent Crude May 21

$/barrel

69.36

34.65%

6.95%

Last week saw the complex post gains due to strength late in the week. Gas and power markets posted gains on Monday but were met with losses on Tuesday and Wednesday as the LNG arrivals roster looked healthy with suggestions that cooler temperatures would not last past mid-March. However, Thursday and Friday saw the markets push higher, especially on Friday which saw front month NBP and baseload gain over 1.30p/therm and £1.45/MWh on the day. Fundamentally the NTS has looked a little vulnerable with Norwegian outages and cold temperatures pushing it short, however strong LNG outflow has helped keep the undersupply minimal. Further exacerbating matters is the fact that premiums between the NBP and TTF shrunk on Friday, which could hamper imports and further weaken the supply picture.

Also supporting moves higher late in the week was strength in carbon as the Dec 21 contract gained just under €1.50/tonne from Thursday’s open to Friday’s settlement, which saw prices push above €39/tonne once again. This strength in carbon saw strong support lent to power pricing with impressive weekly gains down the curve. Oil markets again showed some signs of weakness early in the week with the market pricing in expectations of OPEC+ easing supply cuts due to the recovery in Crude pricing. Also adding to the malaise was data showing Chinese buying had abated due to full strategic reserves and disappointing factory output. However, the May 21 contract went on to rise from lows of $62.38/barrel seen on Tuesday to finish the week eyeing $70/barrel as OPEC+ defied market expectations and voted to continue supply cuts into April.

Last Week’s Average Generation Stack

 

Gas

Wind

Solar

Hydro

Nuclear

Imports & Exports

Biomass

Pumped Storage

Coal

GW

20.66

2.20

2.62

0.41

3.83

3.53

3.00

0.08

1.98

%

53.93

5.73

6.85

1.07

9.99

9.20

7.82

0.22

5.17

This Morning’s View

This morning saw the complex initially push higher with front month NBP reaching highs of 42.10p/therm, Dec 21 EUA's reaching €39.44/tonne, and May 21 Brent pushing above $71/barrel for the first time since October 2018. However, since then pricing has softened with Apr 21 NBP now up just 0.25p/therm, looking more in line with fundamentals. The NTS is forecast 18mcm short as cooler temperatures and a lack of wind output support gas demand, sitting some 20mcm above seasonal norms. With wind output expected to pick up throughout the day, power station demand should begin to ease although load factors still remain depressed compared to seasonal norms. Carbon pricing has also eased with Dec 21 EUA's now just €0.02/tonne above settlement, although the buying action when the contract dipped through €39/tonne to lows of €38.77/tonne may signal some strength. Brent futures raced higher in early trading on news reports of attacks on Saudi oil infrastructure, although have now eased with May 21 $0.60/barrel above settlement and is testing $70/barrel as a level of support.
 

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