Weekly Energy Market Update - 14/06/2021

Last Week’s Pricing & Commentary

Last week saw prices lift across the complex, with gas particularly strong after a gap at the open on Tuesday helped to set the tone for the week with prices only losing steam come Friday. Jul 21 NBP jumped 2.21p/therm at the open on Tuesday as a drop in send-out from LNG facilities coupled with the start of Norwegian maintenance expected to reduce flows into the UK provided support to prices. The contract continued to shift higher, eventually settling 3.29p/therm higher settlement to settlement, with similar gains being achieved along the curve. Come Thursday, front-month gas had reached highs not seen since January this year. Sentiment was maintained until Friday where a lacklustre start to the day led to prices dipping. Jul 21 NBP 1.15p/therm on the day, bringing prices for this contract back in line with Tuesday’s close. Power prices followed a similar trend, finding support from the strength in gas and carbon. Jul 21, Winter 21, and Summer 22 rose by £1.50/MWh, £3.10/MWh, and £1.47/MWh last week, respectively. Storage remains extremely low, with levels still below 2018, however, injections for once looked high as demand sat some way below seasonal norms and prompt prices lower than front-month contracts gave incentive for storage levels to creep higher.

Carbon, although sometimes taking a back-seat to gas, proved a catalyst for bullish pricing last week too. Dec 21 EUAs lifted back above €50/tonne in no time on Monday, reaching 51.62/tonne by lunchtime, a gain of €2.23/tonne. Prices moved higher through to Friday as well before a mid-morning sell-off lasted until the close, giving up value and leaving the contract up €2.70/tonne from the start of the week which would have seemed a conservative view if mentioned on Monday. Oil prices remained stable above $70/barrel although trading ranges of $2 meant the consistent gains last week were not fully reflective of within-day trading. Aside from usual COVID -19 impacts and changeable views of demand recovery, news that the U.S were unlikely to lift certain sanctions on Iran provided relief that the nation would not flood the market with supply. Aug 21 Brent finished the week $0.80/barrel higher.  

Last Week’s Average Generation Stack

This Morning’s View

Prices have ripped higher this morning, with Jul 21 NBP up 3.31p/therm already and gas prices following suit along to Winter 21. A short NTS will be providing some support to a complex willing to push higher. With this said, continued strong renewable output and demand some way below seasonal norms could provide some pressure for prices to ease off. Carbon is finding support here to kick on as Dec 21 EUAs shift €1.17/tonne above settlement too. Oil prices are no different this morning with Aug 21 Brent proving strong, up $0.79/barrel currently. A stronger fuel demand recovery outlook, as some countries continue to ease certain restrictions as vaccination rollouts continue to plough on, is helping to provide some support for oil prices. 
 

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