Weekly Energy Market Update - 24/01/2022

24 Jan 2022

Home Weekly Energy Market Update - 24/01/2022

Last Week’s Pricing & Commentary  

Commodity

Unit

Settlement Price

Change Since 01 Jan 22

Change on Week

UK Gas NBP Feb 22

p/therm

189.31

10.94%

-9.04%

UK Gas NBP Summer 22

p/therm

166.65

8.21%

2.28%

UK Gas NBP Winter 22

p/therm

174.16

7.91%

1.95%

UK Power Base Feb 22

£/MWh

197.45

-26.46%

-9.49%

UK Power Base Summer 22

£/MWh

160.61

8.35%

4.82%

UK Power Base Winter 22

£/MWh

169.93

5.29%

3.84%

Carbon EUA Dec 22

€/tonne

84.47

5.85%

2.91%

Carbon UKA Dec 22

£/tonne

78.00

4.56%

6.92%

Oil Brent Crude Mar 22

$/barrel

87.89

12.52%

2.13%

Last week saw gains for much of the complex as bearish sentiment was largely bucked by fears around a Russian invasion of Ukraine. Front-month gas opened the week trading lower as traders were focused on a healthy roster of LNG vessels and a system handling cold temperatures with ease. Initially supporting pricing was a string of unplanned Norwegian outages, although they were rectified relatively quickly, and the sting of reduced supply softened.

Towards the back-end of the week, attention turned to growing concerns that Russia will invade Ukraine, spurred on by increased levels of intervention and comment from the US and others. Losses early in the week proved enough to cement a 13.82p/therm drop on the week. Further down the curve contracts were not as weak given that one of the main factors in bearish sentiment was the volumes of LNG expected, which can be counted on less down the curve, with Summer 22 and Winter 22 gaining 3.71p/therm and 3.33p/therm respectively.

Power markets largely tracked gas with front month dropping on the week whilst seasonal contracts saw gains. Feb 22 UK base dropped £20.71/MWh on the week after an especially bullish close the prior week, whilst Summer 22 and Winter 22 gained £7.39/MWh and £6.28/MWh. At the prompt end of the market, an expected Triad was seen on Thursday with cooler temperatures and drops in wind also producing some interesting days with Tuesday hitting a high of £772/MWh in the imbalance market. European carbon markets generally tracked gas, although with auction dynamics providing some internal momentum too.

A strong auction on Thursday saw buyers forced to the open market and a surge in EUA pricing as the Dec 22 contract gained c. €3.50/tonne on the day. On the week Dec 22 EUAs gained €2.39/tonne whilst Dec 22 UKAs gained £5.05/tonne, generally being well bought. Brent markets also ground higher on the week with the Mar 22 contract gaining $1.83/barrel. Bullish factors came from the 2022 supply/demand balance looking tight whilst bearish price action was largely linked to a surprise build in US inventories.

 

Last Week’s Average Generation Stack

 

Gas

Wind

Solar

Hydro

Nuclear

Imports & Exports

Biomass

Pumped Storage

Coal

GW

21.03

8.35

0.31

0.44

5.10

3.33

2.66

0.36

1.13

%

49.23

19.56

0.73

1.04

11.93

7.79

6.22

0.85

2.66

 

This Morning's View

This morning has seen a strong open to gas markets with front month NBP up 11.22p/therm and front month TTF up €4/MWh. Strength looks to be linked to continued fears around Russian/Ukrainian tensions and a short NTS won’t be helping the prompt with power station already close to 100 mcm and expected to rise with wind output dropping to below 1GW over the evening peak. This also sees prompt power well supported, with the peak hour clearing at £1,000/MWh in the day-ahead auction. Dec 22 EUAs are up €1.65/tonne, supported by strength in TTF and Mar 22 Brent is up $0.35/barrel with US/Iranian talks breaking down once again.

 

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