Weekly Energy Market Update - 27/09/2021

27 Sep 2021

Home Weekly Energy Market Update - 27/09/2021

Last Week’s Pricing & Commentary

Commodity

Unit

Settlement Price

Change Since 01 Jan 21

Change on Week

UK Gas NBP Oct 21

p/therm

175.95

284.51%

8.08%

UK Gas NBP Winter 21

p/therm

181.40

253.27%

9.38%

UK Gas NBP Summer 22

p/therm

93.56

135.68%

12.73%

UK Power Base Oct 21

£/MWh

188.94

245.29%

15.50%

UK Power Base Winter 21

£/MWh

186.81

222.63%

14.99%

UK Power Base Summer 22

£/MWh

101.25

113.83%

13.38%

Carbon EUA Dec 21

€/tonne

62.94

92.36%

5.82%

Carbon UKA Dec 21

£/tonne

64.75

43.09%

17.39%

Oil Brent Crude Nov 21

$/barrel

78.09

54.33%

3.65%

Last week saw gas pricing plunged into chaos once again on Monday as Gazprom booked no additional capacity via Ukraine for October and took reduced capacity via Yamal. Whilst this changes little in terms of fundamentals, the market exploded higher concerned about any change to winter supply with the front-month posting a close to 27p/therm gain from the prior day’s settlement. However, sentiment started to change over the rest of the week with the contract trading lower day on day to settle 13.15p/therm up on the week. It is worth noting that this statement largely ignores the massive volatility present with several days with trading ranges in excess of 10p/therm, highlighting the importance of the timing of any trade execution for customers on flex contracts. Bearish sentiment came from increased wind load factors helping to ease pressure on the prompt as well as the arrival of one LNG vessel with another expected in the coming days. We have also seen a bit of a disconnect between the prompt and near curve with the day-ahead contract trading at a discount to front month and other winter contracts, which should help with increasing storage levels.

Power markets largely outperformed gas last week, with UK carbon markets seeming to lead power more than any signal from gas on some days. Front-month, Winter 21, and Summer 22 UK base gained £25.35/MWh, £24.35/MWh, and £11.95/MWh. Carbon markets were certainly interesting last week with the divergence between EUA and UKA contracts. Dec 21 EUAs gained €3.46/tonne on the week whilst Dec 21 UKAs gained just over £9.50/tonne, widening the UKA/EUA spread to almost £11/tonne. This dissociation could be linked to limited supply in UKAs compared to their European counterparts, as well as signs of increased investor interest in the UK scheme further exacerbating the physical shortage. Brent crude markets were supported last week by still reduced US supply, eating further into US stockpiles with a larger drawdown in US crude than expected. Also lending some support was the announcement by Iran that OPEC+ would do what they could to keep oil pricing near $70/barrel whilst the global economy continues to fight and recover from the COVID-19 pandemic. The Nov 21 contract posted a gain of $2.75/barrel on the week.

Last Week’s Average Generation Stack

 

Gas

Wind

Solar

Hydro

Nuclear

Imports & Exports

Biomass

Pumped Storage

Coal

GW

12.03

8.17

3.36

0.14

4.94

2.56

2.09

0.20

0.24

%

35.66

24.22

9.95

0.43

14.65

7.60

6.19

0.59

0.71

This Morning’s View

This morning has seen gas pricing continue to climb with the front-month up just over 8p/therm with little change in fundamentals and the NTS forecast 22mcm long as wind output remains strong limiting power station demand to just 40 mcm. Dec 21 EUAs are up close to €1.50/tonne having posted a new all-time high this morning of €64.85/tonne. Nov 21 Brent is also up $0.75/barrel as participants point to reduced supply in the US post-hurricane but also the wider production sphere with OPEC+ not yet increasing output following the pandemic.
 

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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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