Weekly Energy Market Update - 21/10/2019

21 Oct 2019

Home Weekly Energy Market Update - 21/10/2019



Settlement Price

Change Since 01 Jan 19

Change on Week

UK Gas NBP Nov 19





UK Gas NBP Summer 20





UK Gas NBP Winter 20





UK Power Base Nov 19





UK Power Base Summer 20





UK Power Base Winter 20





Carbon EUA Dec 19





Oil Brent Crude Dec 19





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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