Weekly Energy Market Update - 12/08/2019
12 Aug 2019

Very little volume traded last week as most contracts were largely sideways with minimal movement up or down. Gas began the week opening soft on Monday at 50.5 p/therm for the Winter-19 contract before trading sideways as the contract reached 49.8 p/therm at Wednesday’s close, a decrease of 0.7 p/therm (1.39%). Power also followed this trend with the Baseload Winter-19 contract ending Wednesday at £55.23/MWh after losing £0.55/MWh (0.99%) from Mondays open. Power contracts down the curve are still sat towards the bottom end of the range, with weak fundamentals being offset by high carbon prices and geopolitical uncertainty.

Thursday brought about sharp increases in prices over the day although volumes remained thin. The Winter-19 gas contract opened at 49.7 p/therm before consistently increasing on the day as it finished the day at 51.1 p/therm, an increase of 2.82%. The front end of the curve experienced more significant gains with a 9.59% increase for the Sep-19 gas contract. The trend was mirrored in the power market with the Winter-19 contract pushing higher to finish Thursday at £55.88/MWh, an increase of £0.65/MWh (1.18%) while the Sep-19 contract showed a sharper move of 3.38% for the day. However, neither gas nor power sustained these levels as both markets drifted lower again on Friday and ended the week lower than where they began. The NBP Winter-19 closed on Friday at 50.15 p/therm, posting a loss of 0.35 p/therm (0.69%) for the week and UK Baseload Winter-19 closed on Friday at £55.49/MWh, showing a loss of £0.29/MWh (0.52%) for the week. Losses would have been more pronounced for the week had it not been for the sharp correction on Thursday for both gas and power. 

Carbon experienced a week of losses as the Dec contract shed €1.05/tonne by Friday, a decrease of 3.6%. Any rallies the contract underwent were short lived and preceded price drops as the contract gave up gains. Oil grabbed most of the headlines as the benchmark contract dropped significantly by 8.81% to the lows which forced OPEC to open discussions regarding production cuts to help bring some strength back to the commodity price. This did appear to help the contract show some gains following the drop in price from $61.28/barrel to the low of $55.88/barrel as it ended the week at $57.75/barrel. 

To end the week with a bang, at 5pm on Friday 9th August, nearly 1 million people were affected by widespread power outages across England and Wales. To read more about this event, please read our dedicated insight to this event here. 

Gas and power markets have opened up muted this morning with thin volume trading across the board. Our view remains that weak fundamentals are currently being offset by a more technically bullish picture. Given that we are now well and truly into summer holiday season we’d expect to see volumes remain low and as such markets could get pushed around more easily. Carbon is also at the lower end of the recent range close to a number of important support levels.


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