Weekly Energy Market Update - 11/05/2020

11 May 2020

Home Weekly Energy Market Update - 11/05/2020

Last Week's Pricing & Commentary

Commodity

Unit

Settlement Price

Change Since 01 Jan 20

Change on Week

UK Gas NBP Jun 20

p/therm

13.98

-49.31%

1.30%

UK Gas NBP Winter 20

p/therm

32.46

-25.29%

3.87%

UK Gas NBP Summer 21

p/therm

29.11

-23.79%

3.42%

UK Power Base Jun 20

£/MWh

25.72

-31.49%

1.90%

UK Power Base Winter 20

£/MWh

41.41

-14.14%

2.78%

UK Power Base Summer 21

£/MWh

36.35

-14.37%

2.34%

Carbon EUA Dec 20

€/tonne

19.35

-21.44%

2.38%

Oil Brent Crude Jul 20

$/barrel

30.97

-51.47%

18.66%

Jul 20 Brent began the week in the mid $20’s and early gains at the start of the week lifted the contract above the $30 technical level where the contract, slightly erratically, moved sideways through to the end of the week to end the week at a price last seen in mid-April. Again, it must be stressed a c. 18% increase on the week for oil may look like significant recovery for the commodity but the Jul contract is still 50% lower than the start of the year so considerable percentage movements whilst prices are this low should be taken with a pinch of salt. The bullish oil move has been largely attributed to easing lockdown measures, optimism that many countries are past their peak and U.S. gasoline stocks falling where a rise was expected. With this said, when the contract laboured sideways through to the end of the week it’s clear that fears remain over a second Covid-19 wave and a glut of supply is still apparent.

Whilst there was strength amongst the rest of the energy complex, gas, power and carbon increases were much more muted in comparison to oil. Prompt and near-term gas and power contracts were supported by strong exports, a typically short system and renewable generation below seasonal norms for most of the week. Jun 20 NBP and Baseload rose 0.18p/therm and £0.48/MWh as a result. However, gains further along both curves were more substantial, which signals a slight change to recent trends whereby near-term contracts saw greater price movement from headline news whilst further dated contracts weakened as Covid-19 related impacts continued to develop.

Carbon shifted sideways through the week, attempting to but ultimately failing to rise and settle above the €20 mark. Dec 20 EUAs saw a €0.45/tonne increase on the week as the commodity rose in line with gas and power.A week of gains across the energy complex as many countries began to implement plans or measures to ease their respective lockdowns, helping demand and prices to lift. Some analysts are expecting further headline driven volatility although they believe demand and prices may have bottomed out.

Last Week’s Average Generation Stack

 

Gas

Wind

Solar

Hydro

Nuclear

Imports & Exports

Biomass

Pumped Storage

Coal

GW

7.29

4.33

6.67

0.16

5.65

2.73

2.47

0.00

0.00

%

24.89

14.78

22.76

0.56

19.29

9.30

8.43

0.00

0.00

This Morning’s View

Very high renewable generation has helped the NTS open long this morning, despite demand rising above seasonal norms today. Wind output hit highs of 14.20GW yesterday and looks set to hit similar generation levels today, currently providing c. 40% of the stack. Most of the energy complex is pushing lower this morning with near-term gas contracts, carbon and oil all off from settlement. Jun 20 NBP, Dec 20 EUAs and Jul 20 Brent are off 0.52p/therm, €0.42/tonne and $1.01/barrel from settlement. It’s likely that expected updates from several countries regarding easing lockdown measures could provide direction for the energy complex at short notice, but contracts could drift sideways in the absence of any confirmed news.

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