Weekly Energy Market Update - 31/08/2021

31 Aug 2021

Home Weekly Energy Market Update - 31/08/2021

Last Week’s Pricing & Commentary

Commodity

Unit

Settlement Price

Change Since 01 Jan 21

Change on Week

UK Gas NBP Oct 21

p/therm

122.61

167.94%

15.47%

UK Gas NBP Winter 21

p/therm

123.65

140.80%

13.91%

UK Gas NBP Summer 22

p/therm

72.70

83.13%

4.00%

UK Power Base Oct 21

£/MWh

116.79

113.43%

9.96%

UK Power Base Winter 21

£/MWh

118.68

104.97%

9.42%

UK Power Base Summer 22

£/MWh

79.41

67.72%

3.86%

Carbon EUA Dec 21

€/tonne

60.76

85.70%

9.79%

Carbon UKA Dec 21

£/tonne

50.75

12.15%

7.89%

Oil Brent Crude Oct 21

$/barrel

73.41

43.80%

6.78%

The week began fuelled by volatility with gas flows into the Mallnow entry point on the German/ Polish border increasing over Monday afternoon by 85% on what was being flowed last week, helping to present a mixed bag early on. Contracts returned to strength and despite swings in pricing, it was one-way traffic in terms of bullish prices. Norwegian outages at the Nyhamna plant drove NBP higher at the front of the curve on Tuesday, rising by more than 8p/therm with Winter 21 NBP closely following. Whilst Gazprom’s Nord Stream 2 statement took a bite out of the gas price, the noncommittal wording of the statement and the tight Russian domestic balance have seen this bearish driver fade. Aside from changing headlines, support continues to be found in lower-than-normal European gas storage levels and a tiny roster of LNG arrivals to the UK. The outage at the Nyhamna plant, originally expected to end on Saturday, extended until today, lower than expected wind and strong carbon helped gas and power end the week higher still.

Sep saw new highs before expiry, along with Winter. Winter 21 NBP and baseload eventually settled 15.10p/therm and £10.22/MWh higher by the end of the week whilst Summer 22 NBP and baseload rose a paltry 2.79p/therm and £2.95/MWh in comparison. Carbon began the week with EUA’s and UKA’s deviating from one another which saw Dec 21 EUA’s €0.96/tonne higher whilst Dec 21 UKA’s dropped by £0.61/tonne. Aside from this the contracts both generally followed suit, mostly finding strength from bullish gas although bearish pressure came from bumper supply caused by two auctions on Wednesday. Oil pricing was changeable as Covid related impacts remain a constant but fading somewhat as a fire at a Mexican offshore platform took 400,000 bpd offline and worries mounted with Hurricane Ida inbound to U.S shores. The Oct 21 Brent contract settled the week $4.66/barrel higher, ultimately lifted by hampered supply and expectations of further disruption as Hurricane Ida impacts production and supply. 


Last Week’s Average Generation Stack

 

Gas

Wind

Solar

Hydro

Nuclear

Imports & Exports

Biomass

Pumped Storage

Coal

GW

12.04

4.31

4.14

0.21

5.17

4.74

1.80

0.19

0.38

%

36.52

13.08

12.56

0.63

15.68

14.36

5.44

0.58

1.15

This Morning’s View

This morning has seen Oct 21 NBP shoot higher, lifting c. 1.34p/therm above settlement, with bullish movement filtering along the curve to Winter 21 which is up 2.351p/therm from settlement. Despite this, carbon sinks lower, currently €0.76/tonne below settlement on the Dec 21 EUA contract. Oil began the day flat but has since dipped below settlement with Oct 21 Brent down $0.49/barrel at time of writing. Low wind output and demand in line with seasonal norms could put further pressure on gas and see power lift despite weak carbon. 
 

 

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