Weekly Energy Market Update - 13/07/2020

13 Jul 2020

Home Weekly Energy Market Update - 13/07/2020

Last Week’s Pricing & Commentary

Commodity

Unit

Settlement Price

Change Since 01 Jan 20

Change on Week

UK Gas NBP Aug 20

p/therm

13.67

-53.36%

-10.65%

UK Gas NBP Winter 20

p/therm

34.03

-21.68%

-1.08%

UK Gas NBP Summer 21

p/therm

31.50

-17.54%

-1.41%

UK Power Base Aug 20

£/MWh

31.52

-17.25%

-4.72%

UK Power Base Winter 20

£/MWh

46.63

-3.32%

-1.10%

UK Power Base Summer 21

£/MWh

41.88

-1.34%

-2.51%

Carbon EUA Dec 20

€/tonne

29.02

17.82%

3.31%

Oil Brent Crude Sep 20

$/barrel

43.24

-31.09%

1.00%

Last week saw gas and power pricing swing lower despite carbon pushing ever closer to the key €30 technical level. This was a contrasting story to the previous week where rampant carbon helped lift gas and power along the curve. Early in the week, strength in carbon helped prop up gas and power prices with both commodities largely edging higher up to Tuesday’s settlement. Winter 20 NBP rose 0.624p/therm from Monday’s open to Tuesday’s settlement with renewable generation lowering on Tuesday and EUAs hitting highs of €29.93/tonne to help direct the contract. Power lifted similarly, particularly at the front end, with Aug 20 baseload rising £0.53/MWh over the same period. It is likely that length in the NTS, helped by Norwegian flows picking up, and strong renewable output on Monday helped to limit gains led by carbon. After carbon failed to breach €30 on Tuesday, the contract began to sell-off, posting a loss through to the end of the week but managing to hold the €29 level after hitting lows of €27.75/tonne on Friday. Once again gas and power followed the trend set by carbon, cementing losses for both commodities on the week. Winter 20 NBP and baseload went on to lose 0.975p/therm and £0.74/MWh Wednesday to Friday.

Oil moved independently of the rest of the energy complex as the Sep 20 contract posted a modest gain on the week, rising just $0.43/barrel despite some bearish sentiment in the market. The US continues to post growing covid-19 cases however generally strong economic data, rising US oil demand and strength in equities has managed to occur. Despite this, many in the market are understandably nervous with the US implementing increased measures to negate the spread of the virus as worries of another full lockdown remain very real. 
 

Last Week’s Average Generation Stack

 

Gas

Wind

Solar

Hydro

Nuclear

Imports & Exports

Biomass

Pumped Storage

Coal

GW

12.86

4.67

4.89

0.30

5.28

1.97

2.45

0.02

0.00

%

39.63

14.38

15.08

0.92

16.27

6.08

7.56

0.07

0.00

This Morning’s View

A quieter start this morning with gas taking its time to get going. Little has traded along the curve so far with the first couple of months flat to settlement whilst Oct 20 NBP is up 0.30p/therm. Gas could continue to take direction from carbon with Dec 20 EUAs beginning the morning strongly, currently up €1.42/tonne, moving above the much talked about €30 level. As carbon reaches unchartered territory, analysts will watch closely to see if the bullish run can be sustained above this level. The NTS has opened long this morning, by 23mscm, which should keep prompt and near-term pricing in check. Gas burn generation is providing the lions share of the stack this morning, however with wind providing close to 20% of the stack and solar expected to pick up, we could see even more pressure applied to the prompt. Oil is dropping off this morning with Sep 20 Brent down $0.47/barrel from settlement as the market eyes an OPEC meeting this week where it is believed supply cut measures will be eased, thus increasing production.

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