WEEKLY ENERGY MARKET UPDATE - 17/10/2022

17 Oct 2022

Home WEEKLY ENERGY MARKET UPDATE - 17/10/2022

Last Week’s Pricing & Commentary  

 

Commodity

Unit

Settlement Price

Change Since 01 Jan 22

Change on Week

E&S Desk View

UK Gas NBP Nov 22

p/therm

261.35

70.68%

-40.71%

Last week was volatile, but due to mild temperatures and large quantities of LNG arriving this week in the UK, the bears took hold of the volatility to push markets down.

UK Gas NBP Summer 23

p/therm

367.69

117.07%

-12.69%

UK Gas NBP Winter 23

p/therm

387.38

384.04%

-10.33%

UK Power Base Nov 22

£/MWh

373.33

160.02%

-31.69%

UK Power Base Summer 23

£/MWh

294.21

82.29%

-9.37%

UK Power Base Winter 23

£/MWh

324.42

265.05%

-8.60%

Carbon EUA Dec 22

€/tonne

68.02

-14.76%

-7.17%

Carbon UKA Dec 22

£/tonne

71.01

-4.81%

-7.26%

Oil Brent Crude Nov 22

$/barrel

91.63

20.82%

1.75%

 

Early last week saw a lot of market volatility with prices jumping and very large trading ranges across most contracts, this was primarily due to market uncertainty and fundamentals such as an ‘incident’ at a Norwegian gas terminal which caused the TTF market to react aggressively. However, the markets well and truly closed in a bearish manner as the UK and Europe experienced higher than average seasonal temperatures, wind generation remained healthy and LNG supplies were arriving in large volumes. These fundamentals combined to create demand destruction as well as a reduction in supply tightness resulting in falling prices. This is evidenced by UBL Nov22 which settled at the end of last week at £373/MWh compared to the week before when it had been trading in the £420/MWh range. Furthermore, the risk premiums at the front of the curve for power and gas are beginning to get priced out which also contributes to weakening prices. Finally, Brent crude while overall up compared to the week before, registering a weekly gain of 1.75%, actually fell dramatically from the week’s high of $98.6/barrel over the last two sessions. This was primarily due to a large stockpile of crude in the US and also Covid springing up again in China, which when coupled with its declining economic outlook is reducing demand from the second largest oil importer.

 

Last Week’s Average Generation Stack

 

Gas

Wind

Solar

Hydro

Nuclear

Imports & Exports

Biomass

Pumped Storage

Coal

Total

GW

13.56

9.52

4.03

0.42

4.53

1.09

2.08

0.03

0.23

35.49

%

38.20

26.83

11.35

1.18

12.76

3.06

5.86

0.08

0.66

 

 

This Morning’s View

 

Later this week it is expected that the EU will close in on detailing their proposed price cap for gas and potentially proffer a different index to TTF. Yet certain members of the bloc remain nervous of what the implications of a price cap may well be, with the likes of Belgium fearing blackouts due to LNG being diverted to premium paying markets such as Asia. The Nord stream investigation are ongoing, and several arrests have been made off the back of several drone sightings near Norwegian energy infrastructure. Fortunately, the drone ‘scares’ haven’t resulted in any flow outages and flow from Norway is at a level of 338mcm, therefore plentiful supply and warm temperatures should see prices remain weak.

 

Wider news

The time for negotiations is over, says French finance minister as petrol crisis drags on | Reuters

Lawmakers will try to oust UK PM Truss this week, Daily Mail reports | Reuters

 

 

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