Weekly Energy Market Update - 08/11/2021

8 Nov 2021

Home Weekly Energy Market Update - 08/11/2021

 

Last Week’s Pricing & Commentary  

Commodity

Unit

Settlement Price

Change Since 01 Jan 21

Change on Week

UK Gas NBP Dec 21

p/therm

191.43

267.01%

15.33%

UK Gas NBP Summer 22

p/therm

103.73

161.29%

2.40%

UK Gas NBP Winter 22

p/therm

106.31

125.72%

1.45%

UK Power Base Dec 21

£/MWh

181.29

213.81%

3.71%

UK Power Base Summer 22

£/MWh

103.94

119.50%

1.85%

UK Power Base Winter 22

£/MWh

106.35

95.72%

-0.20%

Carbon EUA Dec 21

€/tonne

59.39

81.51%

1.16%

Carbon UKA Dec 21

£/tonne

54.20

19.78%

0.93%

Oil Brent Crude Jan 22

$/barrel

82.74

63.16%

-1.17%

Last week saw gas markets initially move lower as the news broke over the weekend prior that Putin had ordered Gazprom to flow gas to Gazprom-owned storage facilities in Europe once domestic storage was full. Whilst Monday saw front month drop within-day it rose a little settlement-to-settlement, which may have been a sign of the market’s cautiousness to come. Over the rest of the week, the contract rose to settle 25.45p/therm higher on the week, largely spurred by gains on Wednesday that saw value increase c. 23.50p/therm. Once again, the front of the curve had 200p/therm in its sights and spent Thursday and Friday attempting to stay above the level but ultimately failed. Summer 22 and Winter 22 UK gas gained just 2.43 p/therm and 1.52p/therm on the week. Power markets were mostly stronger last week with Dec 21 and Summer22 UK base gaining £6.48/MWh and £1.89/MWh, although Winter 22 dropped £0.21/MWh.

Prompt power markets brought some excitement last week with Tuesday producing system pricing just below £4,000/MWh as wind dropped and cold temperatures supported demand. The remainder of the week saw wind load factors pick up once again to keep markets in check with day-ahead auction results dropping £100/MWh from Tuesday to Friday’s delivery. Carbon markets were stronger on the week with Dec21 EUAs gaining €0.68/tonne whilst Dec 21 UKAs gained £0.50/tonne. Monday saw sellers at the fore for Dec 21 EUAs, although Tuesday quickly erased losses and set the tone for the rest of the week as despite intra-day volatility, the contract ground higher to back above €60/tonne before a Friday afternoon sell-off saw the level given back. The UKA auction last week was well met with all allowances finding a buyer and the auction clearing closer to the trading markets than in previous weeks. Brent crude suffered some losses last week with the Jan 22 contract finishing the week close to $1/barrel lower than the prior week. Losses were linked to the EIA report showing a larger than forecast build in US crude stockpiles, fuelling questions around demand recovery in the short- to mid-term.

Last Week’s Average Generation Stack

 

Gas

Wind

Solar

Hydro

Nuclear

Imports & Exports

Biomass

Pumped Storage

Coal

GW

15.70

10.93

0.32

0.80

5.56

3.71

2.29

0.50

0.41

%

39.04

27.18

0.81

1.98

13.82

9.22

5.68

1.24

1.02

 

This Morning’s View

This morning has seen gas markets push higher with little flow nominated via Mallnow, suggesting that Russian gas is not tuning up to Europe today, as the market expected. Dec 21 is up 12p/therm, although is now 5p/therm off the highs, where some may have expected stronger gains. The NTS is forecast 11.8 mcm long with demand 20mcm below seasonal norms, although strength in near-curve futures will out shadow the system length in driving price action at the prompt. Dec 21 EUAs are up €1.19/tonne, back above €60/tonne, whilst Jan 22 Brent is up $0.87/barrel with a supportive backdrop of a passed $1 trillion US infrastructure bill, higher than forecast Oct 21 Chinese exports, and a rise in the price of Saudi crude

 


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