WEEKLY ENERGY MARKET UPDATE - 26/07/2021

26 Jul 2021

Home WEEKLY ENERGY MARKET UPDATE - 26/07/2021

Last Week’s Pricing & Commentary

Commodity

Unit

Settlement Price

Change Since 01 Jan 21

Change on Week

UK Gas NBP Aug 21

p/therm

88.44

111.63%

3.46%

UK Gas NBP Winter 21

p/therm

92.91

80.93%

2.01%

UK Gas NBP Summer 22

p/therm

56.05

41.18%

1.32%

UK Power Base Aug 21

£/MWh

89.01

73.81%

1.57%

UK Power Base Winter 21

£/MWh

94.39

63.03%

0.67%

UK Power Base Summer 22

£/MWh

62.44

31.87%

0.10%

Carbon EUA Dec 21

€/tonne

50.89

55.53%

-3.78%

Carbon UKA Dec 21

£/tonne

42.40

-6.30%

-2.75%

Oil Brent Crude Sep 21

$/barrel

74.10

46.27%

0.69%

Markets remained choppy last week with carbon retreating over the course of the week whilst oil, power and gas all edged higher. Significant price action was focused on the front 9 months of the gas curve, with intraday volatility remaining high, as Monday saw Aug 21 NBP breach 91p/therm, touching a high of 91.49p/therm but ultimately failing to sustain this level. Power generally tracked gas characteristics, staying volatile at the front end of the curve with large moves highlighted here either way whilst Summer 22 onwards generally saw more docile activity. Aug 21 baseload ended the week £1.38/MWh higher whilst Aug 21 NBP managed to jump 2.96p/therm on the week. Gas and power prices did stutter on Tuesday and Thursday, seeing marginal or flat moves settlement to settlement on these two days but this could not stop either commodity continuing its bullish run higher. Winter 21 NBP and baseload rose £1.83/MWh and 0.63p/therm by the end of the week. Despite warmer weather and strong solar output, prices came under fire from still bullish fundamentals of strong Asian LNG bids, measly wind output and constant worries around much lower than desired storage across Europe ahead of winter. Summer 22 NBP and baseload were both much more subdued, rising by just 0.73p/therm and £0.07/MWh by the end of the week.

Carbon bucked the energy complex trend last week as EUAs and UKAs lost value, with the two sometimes de-coupling which has been seen in recent weeks at times. Carbon found contrasting influence at times, sometimes softening with worries of delta variants effects, or being dragged higher by strength in gas or the wider complex. Dec 21 EUAs finished the week €2/tonne lower but importantly remained above the key €50/tonne level after the contract briefly touched a low of €49.99/tonne on Friday. Dec 21 UKAs lost £1.20/tonne on the week, mostly following EUAs but occasionally struggling from liquidity and slightly losing its way.

Oil felt the full brunt of delta variant worries on Monday as stock markets globally lost value with investors typically absconding markets particularly exposed to knock on effects from rising COVID-19 cases. Sep 21 Brent lost $4.97/barrel, bringing it below $70/barrel for the first time in over a month. The contract did rebound resolutely with strength linked to expectations that supply will still be tight as global demand and GDP continue to recover. The contract went on to gain $0.51/barrel on the week.

Last Week’s Average Generation Stack

 

Gas

Wind

Solar

Hydro

Nuclear

Imports & Exports

Biomass

Pumped Storage

Coal

GW

14.71

1.76

6.11

0.12

4.15

4.47

2.37

0.13

0.88

%

42.40

5.08

17.60

0.35

11.96

12.88

6.83

0.37

2.52

 

This Morning's View

This morning has seen gas stomp higher once again with Aug 21 NBP up 2.08p/therm, seemingly providing some support for carbon which began the day below settlement but now sees Dec 21 EUAs €1.07/tonne above settlement. Oil on the other hand sinks lower with Sep 21 Brent $0.95/barrel below settlement, finding pressure from concerns around fuel demand linked to floods in China and COVID-19 variants.

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