Weekly Energy Market Update - 10/01/2022

10 Jan 2022

Home Weekly Energy Market Update - 10/01/2022

Last Week’s Pricing & Commentary  

Commodity

Unit

Settlement Price

Change Since 01 Jan 21

Change on Week

UK Gas NBP Feb 22

p/therm

214.96

296.68%

25.97%

UK Gas NBP Summer 22

p/therm

192.00

383.63%

24.67%

UK Gas NBP Winter 22

p/therm

200.79

326.32%

24.42%

UK Power Base Feb 22

£/MWh

246.50

313.87%

-8.19%

UK Power Base Summer 22

£/MWh

177.33

274.52%

19.64%

UK Power Base Winter 22

£/MWh

189.08

247.95%

17.15%

Carbon EUA Dec 22

€/tonne

85.42

157.37%

1.68%

Carbon UKA Dec 22

£/tonne

76.50

62.77%

2.55%

Oil Brent Crude Mar 22

$/barrel

81.75

63.53%

3.51%

Last week saw gas and power markets recover from the sell off between Christmas and the New Year. Front month NBP opened the week strong, catching up to strength in TTF pricing over the bank holiday. Adding to bullish sentiments were upcoming cool temperatures, reversed Russian flows, low EU storage levels and high winds causing disruption to the unloading of LNG at Milford Haven.

Strength was also found late on Wednesday from the news that French Nuclear output was to be lower than expected for the balance of winter with maintenance expected to run through to April, helping front month to gain c. 21p/therm in an hour. Friday brought, by far, the most volatile session of the week with front month trading a 50p/therm range and breaking out to the downside, getting close to 200/therm in late trade.

Weakness looked to be linked to a healthy roster of LNG vessels headed for Europe, warmer temperatures expected for the upcoming week, stop levels being hit as well as announcement from the Dutch government that they were set to increase output from the Groningen gas field by almost double to ensure security of supply. Despite Friday’s sell off front month gained 44p/therm on the week whilst Summer 22 and Winter 22 gained 38p/therm and 39.41p/therm.

Power markets largely tracked gas although settlement pricing obscured some of the volatility present. Front month UK baseload jumped higher at that start of the week and legged higher again on the news of reduced nuclear availability in France at time being offered comfortably above £310/MWh. However, with little trading, settlement was marked lower, which helped the contract post a £22.00/MWh loss on the weak as the sell off in gas fed through. Summer 22 and Winter 22 gained £29.11/MWh and £27.68/MWh on the week.

Carbon markets also displayed marked volatility last week. Dec 22 EUAs gained through the first half of the week to sit close to the top of the three-month range with the week’s high of €88.55/tonne printed on Wednesday. Thursday and Friday tempered gains with weakness in the wider complex feeding through. Dec 22 EUAs gained €1.90/tonne on the week whilst Dec 22 UKAs gained £1.41/tonne. Brent crude also had a strong week with the Mar22 contract gaining $2.77/barrel on the week and Monday-Thursday bringing a series of higher highs each day.

Positive sentiment came from reduced fears around Omicron’s severity on the global economy as well as tighter than expected commodity balances for 2022 despite OPEC’s decision to continue to reduce supply cuts.

 

Last Week’s Average Generation Stack

 

Gas

Wind

Solar

Hydro

Nuclear

Imports & Exports

Biomass

Pumped Storage

Coal

GW

15.25

12.80

0.22

0.76

6.03

3.96

2.73

0.50

0.07

%

36.02

30.24

0.53

1.81

14.24

9.35

6.45

1.19

0.17

 

This Morning’s View

This morning has seen gas markets trade a little higher from last week’s lows, although still 8.50p/therm below settlement. The NTS is forecast 1.6 mcm short with demand above seasonal norms, aided by power station demand above 90 mcm as wind output dipped overnight. Dec 22 EUAs are down €0.85/tonne, taking direction from gas whilst Mar22 Brent edges higher as supply disruptions in Kazakhstan and Libya support pricing.

 

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