Weekly Energy Market Update - 27/07/2020
27 Jul 2020

Last Week’s Pricing & Commentary

Commodity

Unit

Settlement Price

Change Since 01 Jan 20

Change on Week

UK Gas NBP Aug 20

p/therm

13.59

-53.63%

2.88%

UK Gas NBP Winter 20

p/therm

31.62

-27.23%

-3.75%

UK Gas NBP Summer 21

p/therm

28.62

-25.09%

-6.18%

UK Power Base Aug 20

£/MWh

29.90

-21.50%

-2.29%

UK Power Base Winter 20

£/MWh

44.28

-8.19%

-3.59%

UK Power Base Summer 21

£/MWh

39.20

-7.66%

-4.88%

Carbon EUA Dec 20

€/tonne

26.37

7.06%

-4.46%

Oil Brent Crude Sep 20

$/barrel

43.34

-30.93%

0.60%

Last week saw carbon take the spotlight once again as the Dec 20 contract traded in a two Euro range, giving direction to gas and power markets. Front month gas bucked the trend of the rest of the complex, gaining 0.38p/therm on the week as prompt markets were a little stronger on lower renewable output and expectations of fewer LNG deliveries into the UK. Curve gas was weaker tracking losses in carbon with Winter 20 and Summer 21 NBP dropping 1.23p/therm and 1.89p/therm on the week. Also adding to bearish sentiment was growing COVID-19 cases across Europe and a lack of returning power and gas demand. Power pricing slid lower on the week with Aug 20, Winter 20 and Summer 21 baseload giving up £0.70/MWh, £1.65/MWh, and £2.01/MWh respectively. Again, losses were reduced at the front end due to shorter term dynamics of lower renewable output as well as slightly stronger gas prices. Curve power clearly tracked carbon prices gaining where Dec 20 EUAs rebounded but ultimately dropping on the week inline with EUAs falling some 4.5%.

Dec 20 EUAs opened the week with strong losses as the contract dropped almost €1.50/tonne during Monday’s trading and whilst Tuesday and Wednesday were spent erasing these losses, bearish price action over the remainder of the week cemented a €1.23/tonne loss on the week. Again, correlation to equities and macro sentiment should not be underplayed with weaker equity markets leaning on price action later in the week. Also adding to bearishness for EUAs is the additional supply from the Innovation Fund. Brent markets see-sawed on the week with bullishness in the first half of the week offset by falling prices in the latter. Tuesday’s trading saw the Sep 20 contract hit a week high of $44.83/barrel as the EU agreed their recovery fund as well as optimism around a vaccine spurred pricing higher. However, over the rest of the week, US-China tensions began to bite markets with each country forcing the closure of consulates and causing fears of a fully-fledged trade war breaking out. Also adding to downward price movement was a rise in US crude oil inventories and the continued growth in global COVID-19 cases.

Last Week’s Average Generation Stack

 

Gas

Wind

Solar

Hydro

Nuclear

Imports & Exports

Biomass

Pumped Storage

Coal

GW

12.41

4.85

5.20

0.20

5.22

2.38

2.47

0.08

0.00

%

37.81

14.78

15.84

0.61

15.91

7.26

7.53

0.25

0.00

This Morning’s View

This morning has so far seen carbon, gas and oil markets move lower in early trading. Front month NBP is currently down 0.30p/therm, perhaps on relatively strong wind output already above 9GW and expected to climb into overnight trading. However, the prompt could be feeling some support from real time NTS data showing a slightly short NTS. Dec 20 EUAs are down €0.59/tonne, having traded through the €26 mark, this downwards price action may lean on gas and power prices although a well bid auction may see prices recover. Sep 20 Brent is current down $0.29/barrel. Prices dropped during overnight trading, mirroring Asian equites as US-China tensions and COVID-19 case numbers weighed. However, prices could see some support from storms that could threaten supply in the US and Mexico.

 

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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. 
 
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