Weekly Energy Market Update - 12/04/2021

12 Apr 2021

Home Weekly Energy Market Update - 12/04/2021

Last Week’s Pricing & Commentary

Commodity

Unit

Settlement Price

Change Since 01 Jan 21

Change on Week

UK Gas NBP May 21

p/therm

46.86

7.11%

-3.34%

UK Gas NBP Winter 21

p/therm

55.34

7.78%

-2.05%

UK Gas NBP Summer 22

p/therm

41.09

3.50%

-1.94%

UK Power Base May 21

£/MWh

56.64

7.05%

0.75%

UK Power Base Winter 21

£/MWh

66.32

14.54%

1.28%

UK Power Base Summer 22

£/MWh

50.33

6.29%

0.74%

Carbon EUA Dec 21

€/tonne

43.64

33.46%

2.32%

Oil Brent Crude Jun 21

$/barrel

62.95

21.85%

-2.51%

 

Last week saw gas markets begin the week with strength after a long weekend, however, this was eroded over the week as front-month dropped some 1.62p/therm, Winter 21 dropped 1.16p/therm and Summer 22 lost 0.81p/therm. These were not smooth downwards movements by any stretch with volatility remaining high and intraday ranges of 1.50p/them on three of the four trading days. At the prompt end of the market, fundamentals looked relatively bullish with cooler temperatures and low wind although the system managed these bullish drivers relatively comfortably. One factor to monitor is the bid for storage as last week saw shippers nominate to push gas out of storage, dropping the storage stock levels to below that of last April, which could support UK gas over the coming weeks. UK power traded up strongly on Tuesday, settling some £1.51/MWh above Friday’s settlement, however over the week tracked losses in gas. Losses were somewhat less pronounced, however, due to support from carbon.

Dec 21 EUAs marched higher on Tuesday, gaining €1.52/tonne after ripping through both €43/tonne and €44/tonne. Some profit-taking and price action relaxation saw the contract move back below €44/tonne over the mid-week, however, the contract managed to stick well above €43/tonne after some stronger auction results and support from a bullish macro backdrop. Brent markets suffered heavy losses on Monday as OPEC+ disappointed the market, rejecting the continuation of supply cuts. However, the dip below $62/barrel was well bought and remained so throughout the week, pushing the contract into a tighter, more range-bound trading pattern.


Last Week’s Average Generation Stack

 

Gas

Wind

Solar

Hydro

Nuclear

Imports & Exports

Biomass

Pumped Storage

Coal

GW

11.68

9.98

4.92

0.45

4.94

2.51

2.19

0.01

0.00

%

31.84

27.22

13.42

1.23

13.46

6.84

5.96

0.04

0.00

 

This Morning’s View

This morning has seen UK gas leap higher at the open, with front month opening 1.44p/therm above settlement and pushing to morning highs of 48.75p/therm. However, since then the excitement has somewhat eased with front month up just 1.19p/therm. The NTS is forecast 25mcm short as wind generation sits at just 3GW of output, temperatures are below seasonal norms, and LNG supply sits below 70 mcm. This forecast shortness sees shippers continue to withdraw from storage, increasing the bid volume later in the injection season. Low wind is also supporting UK prompt power with West Burton 1 being warmed outside of the BM and Medway Power Station running at £2,750/MWh in the BM. Wind load factors are not expected to pick up materially throughout the day, so prompt power pricing may get interesting when trying to meet the evening peak. Carbon markets have pushed a little higher, supported by the move up in gas with Dec 21 EUAs up €0.16/tonne. Early on, it looked like a move to €44/tonne may have been on, although the contract ultimately printed a high of €43.99/tonne before pulling back. Brent dips below settlement with Jun 21 down $0.22/barrel as COVID-19 cases begin to rise in Asia.

 

 

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