Weekly Energy Market Update - 14/04/2020

14 Apr 2020

Home Weekly Energy Market Update - 14/04/2020

Last Week’s Pricing & Commentary

Commodity

Unit

Settlement Price

Change Since 01 Jan 20

Change on Week

UK Gas NBP May 20

p/therm

16.86

-42.32%

4.46%

UK Gas NBP Winter 20

p/therm

33.86

-22.07%

2.67%

UK Gas NBP Summer 21

p/therm

30.90

-19.11%

2.73%

UK Power Base May 20

£/MWh

26.95

-29.54%

4.86%

UK Power Base Winter 20

£/MWh

41.51

-13.93%

2.47%

UK Power Base Summer 21

£/MWh

37.82

-10.91%

3.70%

Carbon EUA Dec 20

€/tonne

21.08

-14.41%

13.95%

Oil Brent Crude Jun 20

$/barrel

31.74

-50.74%

-0.06%

A particularly strong week for carbon as most of the energy complex posted gains amid murmurs of easing lockdown provisions in some of Europe whilst the OPEC+ meeting scheduled for Thursday helped oil sideways on the week. The week began with growing optimism emerging that initial coronavirus infection peaks could be behind some of the worst-hit EU countries which helped gas and power to lift higher on Monday. May 20 NBP and baseload posted increases of 0.84p/therm and £1/MWh with contracts further down the curve also seeing consistent gains. These near-curve contracts were supported by falling new coronavirus cases in some of Europe and Spain’s death tally falling for a fourth consecutive day.

Strong opens from gas and power on Tuesday helped the commodities to post another day of gains, despite contracts easing off from the high open as the day progressed. Following on from the sell-off late on Tuesday, gas and power continued to sell off through Wednesday and Thursday. The front two seasons of gas and power still rose c. 2.7% and 3.09% on the week despite the softer ending to the week. 

Carbon moved independently last week as Dec 20 EUAs posted a staggering c. 14% rise on the week to rise well above the €20 mark. Carbon was particularly strong on Monday as the Dec 20 contract smashed through key technical levels to settle at €20.40/tonne, up €1.90/tonne on the day. This move pulled the contract back to mid-March levels amid reports of the virus slowdown in Europe which helped the contract gap higher. Tuesday saw the contract retract somewhat as the afternoon sell-off in gas and power helped pull the contract lower on the day, but Wednesday and Thursday brought the contract back to strength.

Oil moved sideways last week with the commodity largely propped up by the planned OPEC+ meeting and the expected production cut. Jun 20 Brent continued to trade in a wide range although settlement to settlement moves were mostly flat as evidenced by the minor loss on the week. Additionally, when OPEC+ ultimately didn’t agree on production cuts on Thursday, it was fortunate that Easter weekend had begun and thus markets were closed to limit downside from the indecision.
 

Last Week’s Average Generation

 

Gas

Wind

Solar

Hydro

Nuclear

Imports & Exports

Biomass

Pumped Storage

Coal

GW

7.85

5.44

7.07

0.36

4.66

2.56

1.87

0.00

0.22

%

26.14

18.12

23.53

1.19

15.53

8.52

6.24

0.00

0.72

This Morning’s View

A quiet start to the week following Easter weekend with little trading along the gas curve at the open although this has begun to pick up now. OPEC+ agreed to cut production by 9.7 million barrels per day in May and June over the Easter weekend but this doesn’t seem to have had much of an effect on markets currently as contracts across the energy complex are currently selling off. May 20 NBP, Dec 20 EUAs and Jun 20 Brent are all off from settlement by 0.77p/therm, €0.71/tonne and $0.21/barrel at time of writing. Wind generation looks set to remain below seasonal norms for the next two weeks whilst forecast demand is back to near seasonal norms today causing the NTS to open short according to National Grid. 

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