Weekly Energy Market Update - 21/10/2019
21 Oct 2019

Commodity

Unit

Settlement Price

Change Since 01 Jan 19

Change on Week

UK Gas NBP Nov 19

p/therm

41.61

-31.80%

-0.62%

UK Gas NBP Summer 20

p/therm

42.08

-13.24%

-4.32%

UK Gas NBP Winter 20

p/therm

51.40

-10.15%

-3.93%

UK Power Base Nov 19

£/MWh

49.13

-20.75%

-0.10%

UK Power Base Summer 20

£/MWh

47.25

-8.29%

-0.96%

UK Power Base Winter 20

£/MWh

54.08

-5.98%

-0.97%

Carbon EUA Dec 19

€/tonne

25.88

4.35%

6.33%

Oil Brent Crude Dec 19

$/barrel

59.42

7.49%

-2.09%

Last week saw a tick up in volatility with Brexit headlines influencing UK energy contracts, but an overall softening of prices across much of the complex. Front month gas posted a loss of 0.26 p/therm on the week and traded in a 2 p/therm range. Seasonal contracts were weaker posting losses averaging closer to 2 p/therm over the course of weak with bearish fundamentals weighing on the contracts. Power pricing largely followed gas with losses down the curve but support and volatility in front month baseload limited losses to just £0.05/MWh compared to seasonal contract losses of £0.50/MWh.

Carbon was an interesting commodity to watch this week with all the Brexit developments. Dec-19 EUAs posted day on day gains in the beginning of week, which shifted the contract from bearish to bullish territory not only on the sentiment of a Brexit deal improving with each headline but also in that the contract managed to trade above some key technical resistance levels such as the 200 day moving average. Thursday and Friday again saw headlines drive price action with news breaking of a mutually agreeable deal being struck between Johnson and EU negotiators only for the DUP to state that they did not back the deal, making it harder for Johnson to get the deal through Parliament. These headlines saw the Dec-19 EUA price swing in a €1.20/tonne range over the two days despite opening on Thursday and closing on Friday in largely the same place.

Oil markets softened with the Dec-19 Brent contract posting a loss of $1.27/barrel over the week amidst a backdrop of a worsening global economic picture with Chinese economic growth reaching its lowest level in almost 27 years and uncertainty over the outcome of US-China trade talks. This week saw US fuel inventories fall, US crude inventories rise, Chinese refinery throughput increase, OPEC lower its 2019 demand estimate and a study finding that OPEC members are exceeding quotas, continuing to add to the oversupplied market.

This Morning’s View

This morning has seen front month gas open 0.11 p/therm below settlement but has quickly traded up 0.7 p/therm to above 42 p/therm, despite National Grid reporting the NTS as currently almost 20 mcm long. This strength could be linked to colder weather forecasts over the coming weeks as well as strength in carbon pricing. Dec-19 EUAs opened almost €0.20/tonne below Friday’s settlement but have since traded up c. €0.50/tonne. This may be linked to French nuclear outages pushing up continental power pricing as well as the UK prime minister being forced by Parliament to seek a Brexit extension after Saturday’s vote. Volatility is expected to continue this week with a meaningful vote on Johnson’s deal, as well as ECB interest rate decisions and European manufacturing data to be released later in the week.
 

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The information provided in this market report is intended for Brook Green Supply Limited clients and subscribers only. The content is provided and intended for general information purposes only. All pricing stated in this market report is indicative, at the time of writing, and may not be attained in trading at any time after report publication. For the avoidance of doubt, Brook Green Supply Limited does not represent or endorse the accuracy or reliability of any of the information or content, expressed or implied, nor are we acting in any capacity as a fiduciary to you. Recipients of this market report must not rely on the information and are advised to take any necessary steps to validate such information, independently assess the economic risks and merits and make your own assessment, or appoint appropriate advisors, on any legal or tax consequences before acting upon it. Under no circumstances will Brook Green Supply Limited have any liability for any loss or damage caused by dependence on any information contained within this market report. Please contact our execution and solutions desk via tradingdesk@brookgreensupply.com for further information. 
 

 

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