Weekly Energy Market Update - 17/01/2022

17 Jan 2022

Home Weekly Energy Market Update - 17/01/2022

Last Week’s Pricing & Commentary  

Commodity

Unit

Settlement Price

Change Since 01 Jan 21

Change on Week

UK Gas NBP Feb 22

p/therm

208.13

21.97%

-3.18%

UK Gas NBP Summer 22

p/therm

108.26

-29.70%

-43.62%

UK Gas NBP Winter 22

p/therm

170.83

5.85%

-14.92%

UK Power Base Feb 22

£/MWh

218.16

-18.75%

-11.50%

UK Power Base Summer 22

£/MWh

154.45

4.20%

-12.90%

UK Power Base Winter 22

£/MWh

163.65

1.39%

-13.45%

Carbon EUA Dec 22

€/tonne

82.08

2.86%

-3.91%

Carbon UKA Dec 22

£/tonne

72.95

-2.21%

-4.64%

Oil Brent Crude Mar 22

$/barrel

86.06

10.18%

5.27%

 

Gas and power spent the first half of the week pushing lower before a late rally Thursday helped prices higher. Prices generally felt pressure from ample LNG expected into UK shores whilst a weak first daily auction of the year for EUAs set the tone for the start of the week. Despite dropping wind output and further cold weather forecast, pressure was felt along the curve for gas and power. The tug of war between LNG and colder weather remained a constant theme for the week and saw prices attempt to edge higher on Tuesday, although ultimately bearish momentum carried prices lower, failing to stick above 200p/therm for front-month NBP. Feb 22 NBP settled 15.65p/therm lower with losses consistent down the curve. The movement lower was similar for power although front-month baseload managed to hold above £200/MWh for an extra day before eventually giving up the level. The contract lost £15.24/MWh with slightly discounted losses further along the curve. Thursday saw prices race higher once again with the dip being well bought as news late in the day that a fire had broken out at the Hornsea gas storage facility. Although no long-lasting effects were expected with REMIT data showing the problem was to be resolved by 18:00 of the same day, fear is still rampant in the market, and this gave the front of the curve room to rally once again. Carbon generally followed weakness in gas and carbon, seeing EUAs and UKAs post losses last week. Dec 22 EUAs dropped €3.34/tonne whereas UKAs managed a decrease of £3.55/tonne. U.S. Covid-19 cases continued to rise, with commentary stating their peak still may not have been seen. However, EIA releasing their updated US oil demand outlook that saw a 140,000 barrel per day increase in 2022 helped dissipate bearish Covid related impacts. Mar 22 Brent rose $4.31/barrel by the end of the week.  

 

Last Week’s Average Generation Stack

 

Gas

Wind

Solar

Hydro

Nuclear

Imports & Exports

Biomass

Pumped Storage

Coal

GW

20.50

6.50

0.90

0.62

5.46

2.86

2.86

0.26

1.53

%

49.42

15.68

2.17

1.48

13.16

6.88

6.90

0.63

3.68

 

This Morning’s View

 

This morning has seen gas open lower, quickly moving below Thursday’s close and in turn erasing gains linked to the fire breaking out at Hornsea gas storage facility, although this did look a little overdone on Friday which generally saw near-term contracts drift lower within day. Carbon has opted to follow weakness in gas which sees Dec 22 EUAs down €0.96/tonne currently. Oil found some support from tight supply initially but a statement from the Saudi Energy Minister saying it’s the prerogative of the U.S. as to whether they release strategic reverses has shown signs of sentiment reversing. Mar 22 Brent is now $0.14/barrel below settlement but could still find some support higher from perceived diminishing impacts from the Omicron variant.

 

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