Weekly Energy Market Update - 12/07/2021

12 Jul 2021

Home Weekly Energy Market Update - 12/07/2021

Last Week’s Pricing & Commentary

Commodity

Unit

Settlement Price

Change Since 01 Jan 21

Change on Week

UK Gas NBP Aug 21

p/therm

90.02

115.41%

1.21%

UK Gas NBP Winter 21

p/therm

96.41

87.75%

2.14%

UK Gas NBP Summer 22

p/therm

57.99

46.08%

2.80%

UK Power Base Aug 21

£/MWh

90.54

76.80%

-0.52%

UK Power Base Winter 21

£/MWh

97.59

68.55%

0.48%

UK Power Base Summer 22

£/MWh

64.58

36.39%

0.26%

Carbon EUA Dec 21

€/tonne

54.26

65.83%

-5.39%

Carbon UKA Dec 21

£/tonne

45.35

0.22%

-4.53%

Oil Brent Crude Sep 21

$/barrel

75.55

49.13%

-0.81%

Last week saw mass volatility and large traded ranges across commodity markets, but particularly so in gas. Front month started the week strong, continuing the prior week’s strength, reaching a high of 94.58p/therm supported by the news that Gazprom had not booked any annual capacity on the Yamal pipeline. However, Tuesday and Wednesday saw a massive reversal with the contract dropping over 15p/therm from Tuesday’s open to Wednesday’s settlement. Many traders attributed this sell off to the Winter 21 contract nearing 100p/therm and profit taking pushing pricing lower, which in turn triggered stops. The rest of the trading week saw the contract push higher, all but reversing the losses seen on Tuesday and Wednesday, as traders commented that the contract had come off too quickly and with no change to the underlying fundamentals of low gas storage and strong competition for LNG it was natural that buyers stepped back in.

Further down the curve, Winter 21 mirrored front month trading a range of close to 18p/therm on the week and settling 2.02p/therm above the prior week whilst volatility eased as you moved further out with Summer 22 trading a 3p/therm range and settling 1.58p/therm higher. Power markets lagged gas to some degree exhibiting fewer wild swings and were hampered somewhat by weaker carbon. Front month lost £0.47/MWh on the week whilst Winter 21 and Summer 22 gained £0.47/MWh and £0.17/MWh. Dec 21 EUAs suffered losses on three out of five trading days last week with the heaviest daily loss on Tuesday standing at €4/tonne. Weakness in gas dragged the contract lower for much of the week, however, once gas began to reverse EUAs struggled to follow in the same way as they did on the way down, although the contract did manage to post a close to €1.60/tonne within-day gain on Friday. Brent markets also saw wide trading ranges and big moves with Sep 21 Brent trading a weekly range of c. $6/barrel. Volatility stemmed from disagreements between Saudi Arabia and the UAE on the continuation of OPEC+ oil supply cuts, which saw the contract lose just over $3.60/barrel between Tuesday’s open and Wednesday’s settlement. Support was found later in the week as US crude and gasoline inventories fell double that of analyst expectations.

Last Week’s Average Generation Stack

 

Gas

Wind

Solar

Hydro

Nuclear

Imports & Exports

Biomass

Pumped Storage

Coal

GW

13.38

3.85

3.96

0.10

4.71

4.45

2.46

0.11

0.74

%

39.65

11.40

11.72

0.31

13.94

13.17

7.28

0.34

2.18

This Morning’s View

This morning has seen gas market volatility continue with front month NBP down 4.06p/therm having traded a 7p/therm range already this morning. Early selling looked linked to weakness in carbon but quickly outpaced EUA losses, perhaps hitting stops of buyers getting into positions late last week. The NTS remains in good shape, forecast 8.3mcm long despite low wind output sitting below 0.50GW. Elsewhere Dec 21 EUAs are down €1.34/tonne and Sep 21 Brent is down $0.60/barrel.
 

 

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