Weekly Energy Market Update: 25.01.2021

25 Jan 2021

Home Weekly Energy Market Update: 25.01.2021

Last Week’s Pricing & Commentary

Commodity

Unit

Settlement Price

Change Since 01 Jan 20

Change on Week

UK Gas NBP Feb 21

p/therm

60.15

6.46%

7.97%

UK Gas NBP Summer 21

p/therm

44.05

1.26%

9.71%

UK Gas NBP Winter 21

p/therm

52.06

1.38%

5.13%

UK Power Base Feb 21

£/MWh

69.81

2.95%

-1.17%

UK Power Base Summer 21

£/MWh

52.97

0.95%

4.83%

UK Power Base Winter 21

£/MWh

59.02

1.93%

4.18%

Carbon EUA Dec 21

€/tonne

34.24

4.71%

8.29%

Oil Brent Crude Mar 21

$/barrel

55.41

7.59%

1.21%

An overall bullish week across the energy complex as contracts were spurred higher by cold temperatures, forecasts of cooler temperatures at the start of February, rumours of French nuclear workers striking and dwindling storage levels. Power and gas tracked one another with contracts along the curve moving higher into Wednesday despite some volatility and within-day losses. Within day losses were spurred by strong wind generation helping to ease CCGT generation lower and climbing temperatures in Asia removing some of the LNG premium, easing some supply nervousness across Europe by improving the likelihood of LNG vessels re-directing to the region. Wednesday brought about a reversal with swelling wind generation, good length in the NTS, and TTF selling off as European gas dipped lower. However, the bearishness was short-lived as prices see-sawed higher through to the end of the week with wind output shrinking, and the expectancy of this to continue through to the weekend, whilst a cold snap predicted for the weekend ensured tightness in the system remained.

Feb 21 NBP ended the week 4.44p/therm higher which seems low when considering recent price action but the volatility and moves seen last week still outside the usual norms. Gains were pronounced along the curve with Summer and Winter 21 NBP rising by 3.90p/therm and 2.54p/therm, respectively. Power saw the front-month baseload contract sit fairly flat on the week, whereas further along the curve Summer and Winter 21 baseload jump by £2.44/MWh and £2.37/MWh. Prompt power markets also remained tight, touching highs of £100/MWh towards the end of the working week and almost £175/MWh on Sunday during peak hours. Carbon posted similar strength to gas and power, increasing by €2.62/tonne on the week as prices settled comfortably above €34/tonne. Notable strength on Tuesday and Thursday was enough to ensure weakness on other days still resulted in a positive move for the week. Oil was more muted than the rest of the complex as the commodity still grapples with COVID-19 implications despite vaccine rollout and other positive news. Mar 21 Brent rose $0.66/barrel on the week to remain within the mid $50 range, an area the contract has felt comfortable for the last couple of weeks.  

Last Week’s Average Generation Stack

 

Gas

Wind

Solar

Hydro

Nuclear

Imports & Exports

Biomass

Pumped Storage

Coal

GW

17.92

8.86

1.25

0.52

5.42

2.77

2.77

0.08

1.74

%

43.35

21.43

3.03

1.26

13.10

6.71

6.71

0.18

4.22

This Morning’s View

The NTS opened slightly long this morning although this length is being eroded as demand remains well above seasonal norms. The early NBP rally has more than reversed with Feb 21 NBP dropping from early highs of nearly 2p/therm above settlement to c. 0.51p/therm below settlement currently. Carbon has drifted below settlement by €0.22/tonne whilst oil has risen $0.38/barrel above settlement. 
 

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