Weekly Energy Market Update - 24/08/2020

24 Aug 2020

Home Weekly Energy Market Update - 24/08/2020

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Last Week’s Pricing & Commentary

Commodity

 

Unit

Settlement Price

Change Since 01 Jan 20

Change on Week

UK Gas NBP Sep 20

 

p/therm

21.05

-30.98%

-7.27%

UK Gas NBP Winter 20

 

p/therm

34.99

-19.47%

-2.81%

UK Gas NBP Summer 21

 

p/therm

30.72

-19.58%

-0.26%

UK Power Base Sep 20

 

£/MWh

36.43

-5.45%

-2.59%

UK Power Base Winter 20

 

£/MWh

46.90

-2.76%

0.47%

UK Power Base Summer 21

 

£/MWh

40.66

-4.22%

0.69%

Carbon EUA Dec 20

 

€/tonne

25.65

4.14%

-0.35%

Oil Brent Crude Oct 20

 

$/barrel

44.35

-28.78%

-1.14%

Early upwards price movements last week were more than offset along the gas and power curves as wind output rocketed and LNG arrivals helped counteract Norwegian planned and unplanned outages whilst markets remained generally choppy as the holiday season continues. Most price action was felt at the front end of gas and power curves as short-term fundamentals drove prices higher through to Wednesday, despite certain days providing within-day losses. Sep 20 NBP and baseload rose by 0.29p/therm and £1.27/MWh by Wednesday’s close as gas burn generation was forced to support the majority of the generation stack, averaging around 50% most days up to midweek. Additionally, unplanned Norwegian outages heaped pressure onto near-term pricing as Norwegian capacity was already lower due to planned outages too. This helped to lift the front of the curve and saw the day-ahead reach highs not seen since before the lockdown on Tuesday. Analysts noted some rallies may have been exaggerated with an expected surge in wind generation and LNG on the way which eventually saw prices slide lower through to the end of the week. Sep 20 NBP and baseload ultimately fell 1.65p/therm and £0.97/MWh on the week. Liquidity was relatively poor further along the curve as losses eased for gas whilst power posted slight gains. 

Carbon mimicked the broad price moves of gas and power with the commodity seeing prices increase early on in the week, trading in more than a €1 range on Monday, whilst the latter half saw pricing retrace and finish lower on the week. Dec 20 EUAs lost €0.09/tonne by Friday’s close after the volatile start to the week. Strong auction results were attributed to supporting the contract in the first half of the week whilst weakness in gas and power contracts as well as bearish macro-sentiment helped prices ease and see the contract flat across the week. Oil finished the week lower as Thursday and Friday in particular saw volatile trading with wide ranges and contract weakness. Oct 20 Brent dropped by $0.51/barrel on the week as unexpectedly high US unemployment figures and OPEC+ comments regarding a slow recovery helped bears move to the forefront. 

Last Week’s Average Generation Stack

 

Gas

Wind

Solar

Hydro

Nuclear

Imports & Exports

Biomass

Pumped Storage

Coal

GW

11.38

8.45

4.76

0.10

3.14

2.51

2.05

0.04

0.13

%

34.94

25.93

14.63

0.32

9.65

7.72

6.29

0.12

0.39

This Morning’s View

Lower wind and solar output continue following lower levels on Sunday which has seen gas burn generation pick back up, currently providing c. 56% of the stack. Carbon has begun the day very strongly, quickly moving more than €1 above settlement with the Dec 20 EUA contract currently sitting at €1.14/tonne above settlement. This strength could help lift contracts elsewhere in the complex as trading picks up. Near-term gas prices move higher with Sep and Oct 20 NBP up 1.55p/therm and 1.42p/therm and has begun to filter down the curve with Winter 20 NBP up 0.76p/therm too. Oil has moved above settlement also although more calmly with Oct 20 Brent up $0.28/barrel with gains linked to US output dropping due to storms closing in on the Gulf of Mexico.

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