WEEKLY ENERGY MARKET UPDATE - 18/07/2022

18 Jul 2022

Home WEEKLY ENERGY MARKET UPDATE - 18/07/2022

 

Last Week’s Pricing & Commentary  

Commodity

Unit

Settlement Price

Change Since 01 Jan 22

Change on Week

E&S Desk View

UK Gas NBP Aug 22

p/therm

200.29

30.81%

-29.04%

Markets wait for news on whether Nord Stream 1 maintenance was successful.

UK Gas NBP Winter 22

p/therm

402.49

137.61%

-2.15%

UK Gas NBP Summer 23

p/therm

272.30

240.25%

6.71%

UK Power Base Aug 22

£/MWh

227.70

58.59%

-13.27%

UK Power Base Winter 22

£/MWh

428.60

165.55%

13.95%

UK Power Base Summer 23

£/MWh

234.23

163.56%

6.49%

Carbon EUA Dec 22

€/tonne

85.38

6.99%

0.98%

Carbon UKA Dec 22

£/tonne

83.37

11.76%

-2.35%

Oil Brent Crude Sep 22

$/barrel

101.16

33.39%

-10.87%

 

The energy markets continued their volatility last week with change to the shape of pricing curves. Front month Aug-22 contracts sold off on Friday afternoon as the risk premium was shed as it gets closer to delivery. Traders battled all week with balancing fears of Nord Stream 1 coming back online. The start of the week began with value selling off on news that Canada was to return Siemens gas turbines, despite little change to fundamentals. Tuesday then saw the market rally on news that one of Equinor’s gas platforms was out of action due to gas leaks, reversing the sell off seen on Monday. Brent saw a large sell off with combined impact of a strong US dollar, fears of an economic slowdown and covid-19 growth in China. Pricing then rallied further on Wednesday as Norwegian flows were still out of action, with NBP Winter-22 pricing hitting 450p/therm. The back end of the week saw a strong sell off with all value added, lost. There was little change in fundamentals, with the possible reasoning for this profit taking and traders de-risking ahead of the weekend. Aug-22 finished the week down 81.95p/therm and £34.85/MWh for gas and power. Winter-22 saw a slight decrease in gas, down 8.83p/therm but value added on the power side, up £52.46/MWh. Traders continue to value winter with added risk premium due to uncertainty of supply. EUAs finished the week up €0.83/tonne with UKAs down £2.01/tonne as the spread in carbon increased. Brent saw a large decrease in value, down $12.34/barrel on the week. Solar generation increased as warm weather provided strong sunshine, generation hitting 25% of demand mid-afternoon on Sunday.  

 

Last Week’s Average Generation Stack

 

Gas

Wind

Solar

Hydro

Nuclear

Imports & Exports

Biomass

Pumped Storage

Coal

GW

13.19

5.27

6.41

0.13

4.84

2.24

2.22

0.08

0.54

%

37.78

15.11

18.35

0.37

13.86

6.41

6.36

0.22

1.53

 

This Morning’s View

This morning has seen the market trade higher, Aug-22 NBP up 13p/therm on last weeks close. Prompt pricing fundamentals remain bullish as temperatures rise above seasonal norms, providing strength to cooling demand. High continental demand will also add to pricing. The NTS is forecast 13.7mcm short with injection back into the UK’s short-term storage. Power station demand also remains strong as wind generation drops. EUAs drop €0.83/tonne on the open, UKAs down £0.03/tonne. Brent Sep-22 contracts are up $2.83/barrel recovering some value lost at the back end of last week.

 

Wider news

Canada sends repaired Nord Stream turbine to Germany

EU urgently needs planned gas demand cuts – regulators

UK solar boom sees new highs

 

 

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