WEEKLY ENERGY MARKET UPDATE – 14/02/2022

14 Feb 2022

Home WEEKLY ENERGY MARKET UPDATE – 14/02/2022


Last Week’s Pricing & Commentary  

Commodity

Unit

Settlement Price

Change Since 01 Jan 22

Change on Week

UK Gas NBP Mar 22

p/therm

185.86

11.28%

-7.30%

UK Gas NBP Summer 22

p/therm

185.66

20.56%

-6.79%

UK Gas NBP Winter 22

p/therm

194.90

20.77%

-6.08%

UK Power Base Mar 22

£/MWh

173.38

-0.34%

-6.49%

UK Power Base Summer 22

£/MWh

173.25

16.88%

-6.15%

UK Power Base Winter 22

£/MWh

184.24

14.15%

-5.50%

Carbon EUA Dec 22

€/tonne

92.87

16.38%

-3.71%

Carbon UKA Dec 22

£/tonne

83.65

12.13%

-4.86%

Oil Brent Crude Apr 22

$/barrel

94.44

20.91%

1.25%

Last week saw gas, power and carbon all lose value, with losses consistent for gas and power whereas a big midweek drop for EUAs dragged the commodity down despite stable, modest gains at the start of the week. Particularly high wind output saw it provide the lions share of the generation stack for much of the week and a peak of over 19GW on Saturday. This, along with milder temperatures, decent LNG arrivals and positivity around France/ Russia talks at the start of last week helped prices drop. Furthermore, rumours of increased Russian flow to Europe later this year as demand eases and storages fill helped to pressure prices along the curve. However, losses were stemmed from potential support from growing buying interest in Asia as well as continued Russian/Ukrainian tensions. Mar 22, Summer 22 and Winter 22 NBP finished the week 14.63p/therm, 13.52p/therm and 12.62p/therm lower, with losses similar in power where the respective baseload contracts lost £12.04/MWh, £11.35/MWh and £10.73/MWh.

Carbon on the other hand, began the week tentatively with EUAs just about holding their level amidst a backdrop of bearishness in the wider energy complex. This showed signs the Dec 22 EUA contract was still striving for €100/tonne however Wednesday saw carbon plummet on reports that EU lawmakers were considering more stringent price control mechanisms for the EU ETS. EUAs experienced their biggest one-day loss since the 17th of December 2021 (losing over €11/tonne that day). Brent prices were largely driven by U.S./ Iran talks which could lead to Iranian supply re-entering the market. With this said, the market still kept an eye on Russia/ Ukraine tensions which could add further volatility to oil. Apr 22 Brent gained a meagre $1.17/barrel on the week to stay near 7-year highs.

Last Week’s Average Generation Stack

 

Gas

Wind

Solar

Hydro

Nuclear

Imports & Exports

Biomass

Pumped Storage

Coal

GW

11.55

13.77

1.23

0.62

5.18

3.54

2.63

0.05

1.36

%

28.93

34.48

3.07

1.56

12.97

8.87

6.59

0.11

3.40

 

This Morning’s View

Near-term gas has lifted this morning, more than erasing last week’s losses in the first couple of hours of trading. Mar 22 NBP is up 17.14p/therm, although seasonal contracts and prices further down the curve are yet to get going. Despite this, carbon has not followed suit, instead shedding more value to move back towards €92/tonne, down €0.70/tonne from settlement currently. Length in the NTS and strong wind output will continue to provide bearish pressure to prices, but gas seems intent on sticking near 200p/therm, despite wild volatility and wide trading ranges. Further adding support could be strength in TTF which is up almost 10% through to Winter 22. Fears over an imminent Russian invasion of Ukraine have provided support to Apr 22 Brent prices although the contract teeters either side of settlement as it struggles for clear direction early on.

 

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