Weekly Energy Market Update - 09/03/2020

9 Mar 2020

Home Weekly Energy Market Update - 09/03/2020



Settlement Price

Change Since 01 Jan 20

Change on Week

UK Gas NBP Apr 20





UK Gas NBP Summer 20





UK Gas NBP Winter 20





UK Power Base Apr 20





UK Power Base Summer 20





UK Power Base Winter 20





Carbon EUA Dec 20





Oil Brent Crude May 20





In a week where we saw imbalance system prices hit £2,242 on Wednesday, bearish fundamentals and sentiment emerged at the forefront for traders and analysts with the energy complex and financial markets mostly posting losses.

Gas began the week by pushing higher at the open as forecast temperatures for the start of the week were below seasonal norms, wind generation was low, and the system opened short. Apr 20 NBP opened 0.87p/therm above Friday’s settlement as a result. However, with lower wind output and general calmer weather, the LNG vessel backlog began to process quickly which helped pull contracts down from the high open. Apr 20 NBP dropped 0.19p/therm from the high open, which wasn’t enough to erase these gains. Power was largely influenced by the same factors with Apr 20 baseload rising £0.37/MWh on the day. Prices continued to move higher over the course of Tuesday due to the same aspects as Monday with the addition of an unplanned outage at Hinkley Point B. Apr and Summer 20 NBP rose 0.95p/therm and 0.738p/therm whilst Apr and Summer 20 baseload rose £0.48/MWh and £0.37/MWh respectively. Wednesday brought a change in price movements as gas and power began to be pulled lower by continued high LNG send-out, warmer and windier weather forecast for the weekend and coronavirus fears growing. Apr and Summer 20 NBP dropped 0.89p/therm and 0.647p/therm from Wednesday through to Friday with Apr and Summer 20 baseload dropping £0.77/MWh and £0.69/MWh over the same period. Winter 20 baseload was the outlier with the contract rising £0.25/MWh over the course of the week.

Carbon and oil decreased last week with Dec 20 EUAs and May 20 Brent losing €0.31/tonne and $3.68/barrel on the week as demand worries caused by coronavirus fears rumble on. Talk of deeper OPEC supply cuts and many banks confirming they’ll take steps to help stabilise financial markets on Monday did help May 20 Brent increase by $2.95/barrel on the day however this was short lived as oil plunged throughout the rest of the week. Fed rate-cuts and OPEC+ output cut discussions failed to provide the desired support for oil and carbon with both commodities sinking lower as the week moved on. Carbon did briefly move upwards by €0.44/tonne on Wednesday helped by the first UK auction since 2018 clearing above market, bringing some bullish sentiment to the fore. Both commodities fell on Friday as coronavirus demand worries continued and OPEC’s recommendation of further supply cuts seemed unlikely to be agreed.

This Morning's View

This morning has seen a massive oil sell-off following Friday’s OPEC+ meeting, which has seen the start of an oil price war and Brent prices dropping as much as 35% this morning. May 20 Brent opened $7.22/barrel below Friday’s settlement before trading down a further $7.03/barrel to the lows this morning. The contract has rebounded from this low and is currently $8.24/barrel down from settlement with volatility expected to continue. Aside from this, renewable generation is provided c. 30% of the generation stack this morning whilst forecast demand has dipped back below seasonal norms. The system has still opened slightly short, by 7.3mscm, this morning but extremely weak oil prices are helping to pull the energy complex lower. Gas is off across the curve with Winter 20 NBP down 1.529p/therm from settlement, Dec 20 EUAs down 0.74/tonne and power likely to follow at the open later this morning.

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