Weekly Energy Market Update - 17/02/2020

17 Feb 2020

Home Weekly Energy Market Update - 17/02/2020

Last Week’s Pricing & Commentary



Settlement Price

Change Since 01 Jan 20

Change on Week

UK Gas NBP Mar 20





UK Gas NBP Summer 20





UK Gas NBP Winter 20





UK Power Base Mar 20





UK Power Base Summer 20





UK Power Base Winter 20





Carbon EUA Dec 20





Oil Brent Crude Apr 20





Last week saw bearish fundamentals continue to weigh on the front end of the curve with Mar 20 NBP and baseload dropping 0.90 p/therm and £0.53/MWh on the week. This was influenced by very strong wind generation, catching the end of storm Ciara at the start of the week and leading into storm Dennis at the end of the week. The wind generation average for the week was just shy of 11GW, peaking at 16.94GW on Monday 10th after midday. In addition to this, demand remained below seasonal norms and storage remains near full, with further LNG on the way as China demand wanes due to the coronavirus. Whilst these aspects continued to put downward pressure on prompt and near-term contracts, contracts further along the curve kicked up, likely helped by the marked strength in EUA and Brent contracts. With the backend lifting, the gas and power summer/winter gap increased to c. 13.70 p/therm and £10.35/MWh. Summer and Winter 20 NBP lifted 0.21p/therm and 1.59p/therm with power gaining £0.07/MWh and £1.04/MWh respectively.

EUAs experienced a week of fairly consistent gains as the Dec 20 contract rose €1.04/tonne on the week, settling above €24/tonne. The contract found strong support at the €23 mark early in the week and as gas, power and crude oil firm midweek, EUAs followed suit, increasing €0.59/tonne and €0.55/tonne on Wednesday and Thursday. The price moves from last week for EUAs saw contracts break out of the recent tighter trading ranges in a return to more volatile price action.

Brent rose by c. $3.12/barrel last week with the Apr 20 contract ending the week at $57.32 at settlement. The commodity remains heavily influenced by coronavirus news and impacts. The contract dropped $0.93/barrel on Monday with commodity and equity markets weakening due to coronavirus news worsening as fatalities were reported to increase. However, the following day brought news that new cases of the coronavirus were slowing in China which helped pricing firm, rising $0.39/barrel on the day. Improving sentiment continued to help Apr 20 push higher mid-week as the contract rose $1.38/barrel on Wednesday. A drawdown in gasoline and fuel stocks may have also provided support to refined products. Thursday saw Apr 20 trade in a wide $2 range as many analysts believed OPEC+ would enforce deeper supply cuts to combat declining demand. The contract jumped $0.59/barrel on the day as news surrounding the coronavirus was more muted.

This Morning’s View

A very quiet start to the week with Mar 20 currently 0.23 p/therm below settlement with little volume passing through most other gas contracts. Dec 20 carbon is €0.08/tonne below settlement as the contract opens lower. Both gas and carbon will likely be helped by a quiet start for oil too as Apr 20 opens $0.06/barrel above settlement. National Grid are reporting a c.24 mscm undersupplied system this morning, which could help to support prompt pricing today. Wind output remains high this morning, currently at 15.81 GW, and is expected to remain high for much of the day. This could help to limit the need for gas burn generation and counteract support from the short system open. With half-term officially underway, trading activity could be somewhat reduced with more muted price action.

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