Weekly Energy Market Update - 11/01/2021

11 Jan 2021

Home Weekly Energy Market Update - 11/01/2021

Last Week’s Pricing & Commentary

Commodity

Unit

Settlement Price

Change Since 04 Jan 20

Change on Week

UK Gas NBP Feb 21

p/therm

60.69

7.42%

7.42%

UK Gas NBP Summer 21

p/therm

43.37

-0.30%

-0.30%

UK Gas NBP Winter 21

p/therm

51.33

-0.04%

-0.04%

UK Power Base Feb 21

£/MWh

70.47

3.92%

3.92%

UK Power Base Summer 21

£/MWh

53.16

1.32%

1.32%

UK Power Base Winter 21

£/MWh

58.72

1.42%

1.42%

Carbon EUA Dec 21

€/tonne

34.92

6.79%

6.79%

Oil Brent Crude March 21

$/barrel

55.99

8.72%

8.72%

Last week saw positive performance across the energy complex. Front-month NBP rose to yearly highs with the settlement price closing at 60.69p/therm. Week on week Feb 21 NBP gained 4.19p/therm, this follows strong demand supported by generally colder than seasonal norm temperatures. National Grid also supplied 2 margin notices that were withdrawn as units were called into the balancing mechanism to provide power supply to meet national demand. Additionally, it is likely that LNG supplies could be redirected for delivery in Asia as premiums remain lucrative. Later dated Summer 21 and Winter 21 contracts slipped marginally by 0.13p/therm and 0.02p/therm, suggesting that short term bullish fundamentals may not materially seep into later-dated contracts. Moreover, temperatures are forecast to rise above seasonal norms over the coming weeks which could reduce demand and thus ease the supply constraints on National Grid.

The UK Baseload Power curve gained on below seasonal norm wind outturn, averaging 6GW across the week. Strong carbon futures also assisted in keeping the curve supported, however as mentioned above, warmer temperatures could see these gains reversed. Feb 21 Baseload gained £4.06/MWh whilst the Summer 21 and Winter 21 contracts gained £1.90/MWh and £2.05/MWh. It is also worth noting that COVID-19 cases in the UK have spiralled with 1,325 deaths recorded in a single day. Power prices may fall if lockdown measures are tightened further to attempt to slow the spread of COVID-19.  Dec 21 EUA's gained €2.22/tonne on the week, bolstered by a bullish energy complex, though there could be a steeper correction in the short term as unfavourable conditions could see NBP and Power curves slipping. March 21 Brent gained $4.45/barrel week on week, this is primarily due to Saudi Arabia’s surprise oil production cut amounting to 1 million barrels per day, though concerns still exist around the commitment of other OPEC members to do the same in order to support prices.

Last Week’s Average Generation Stack

 

Gas

Wind

Solar

Hydro

Nuclear

Imports & Exports

Biomass

Pumped Storage

Coal

GW

20.84

6.13

1.64

0.54

5.87

2.68

2.63

0.34

2.89

%

48.31

14.20

3.79

1.24

13.60

6.21

6.11

0.79

6.71

This Morning’s View

Feb 21 NBP is up 2.70p/therm, down from 3.37p/therm earlier this morning. Demand, though still high, has slipped below seasonal norms slightly. Warmer temperature forecasts and wind outturn may also contribute towards further weakness. Dec 21 EUA's have declined €0.33/tonne as prices retrace following a new high at €35.20/tonne. March 21 Brent is down $0.57/barrel amid growing COVID-19 cases in the US coupled with recent violent protests which may indicate a bumpy Biden presidential transition. 

 

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