Weekly Energy Market Update - 20/01/2020

20 Jan 2020

Home Weekly Energy Market Update - 20/01/2020

Last Week’s Pricing & Commentary



Settlement Price

Change Since 01 Jan 20

Change on Week

UK Gas NBP Feb 20





UK Gas NBP Summer 20





UK Gas NBP Winter 20





UK Power Base Feb 20





UK Power Base Summer 20





UK Power Base Winter 20





Carbon EUA Dec 20





Oil Brent Crude Mar 20





Last week saw further downward price movements for gas and power as both commodities failed to find support in some bullish technical factors but bearish fundamentals weighed on prices along the curve. The system was undersupplied for most of the week as forecast demand crept closer to seasonal norms whilst the temperature and wind generation were forecast to drop last Friday through to the weekend. Despite these bullish aspects, gas and power were more heavily influenced by near-full storage, a mild overall temperature outlook for the rest of winter and high wind generation. Oil prices returned to their recent trading range after nearly reaching $72/barrel with easing geopolitical tensions and rising US stockpiles. Carbon bucked the downward trend of the energy complex, affected by news that Germany confirmed it would phase out brown coal-fired plants by 2038 and that any surplus EUAs would be cancelled as a result.

Gas Feb 20 opened the week strong at 31.5 p/therm and maintained this level on Monday, helped by a short system and downward revisions to temperature forecasts. Losses on Tuesday erased Monday’s gains along the curve with strong wind output and LNG deliveries into Britain remaining high. Feb, Summer and Winter 20 lost 1.84 p/therm, 1.3 p/therm and 0.98 p/therm which brought the front of the curve back below the 30 p/therm mark. Gas continued to ease off into the end of the week and even with French nuclear output dropping 2.5GW on Friday, Summer 20 settled at 26.96 p/therm posting a drop of 2.74 p/therm for the week. Power generally followed gas although losses were more muted and consistent across the curve, supported by bullish carbon. Prices opened higher on Monday, up £0.24/MWh for Summer 20, but the whole curve dropped off consistently throughout the remainder of the week. Feb, Summer and Winter 20 posted losses of £1.35/MWh, £1.31/MWh and £1.89/MWh. 

Carbon tested the €25/tonne level last week with the Dec 20 contract settling at €25.44 at the end of the week. Dec 20 opened the week at €24.04/tonne before selling off on Tuesday, losing €0.22 on the day end settling at €23.84/tonne. The commodity began to show some bullish indicators with auctions clearing at premiums on Wednesday and seeming to have found support at the €24/tonne mark. Following the announcement Germany would cancel surplus EUAs, Dec 20 rallied through to the end of the week, eventually gaining €1.41/tonne on the week. Oil continued its decline from the highs of almost $72 with the Mar 20 contract decreasing $0.93/barrel on Monday. The commodity then moved mostly sideways throughout the week amid a mix of news relating to rising US stockpiles and US/ China and US/ Mexico/ Canada trade deals being signed. Mar 20 ended the week $0.28 down. 

This Morning’s View
The system has opened c. 5.2mscm short this morning, as forecast demand jumps above seasonal norms with lower temperatures from the weekend continuing. Gas burn generation accounts for 55% of the stack due to wind generation remaining low at c. 6GW, less than half of the average wind output at points last week. Gas has opened weak, down 0.95 p/therm from settlement for Feb 20. Power could follow current weakness in gas although the continued rally in carbon could help to limit losses. Dec 20 EUAs are up c. €0.35/tonne from settlement, trading relatively comfortably above €25.50/tonne. Oil prices rose at the open as Libya halts exports over the weekend, with Mar 20 up $0.82/barrel. However, the contract has begun to move lower, currently just $0.35 from settlement.

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