Weekly Energy Market Update: 25.01.2021

Last Week’s Pricing & Commentary

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

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. 
 

Market Report Disclaimer 
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.