Last Week’s Pricing & Commentary  

 

Commodity

Unit

Settlement Price

Change Since 01 Jan 22

Change on Week

E&S Desk View

UK Gas NBP Nov 22

p/therm

285.04

86.15%

-35.33%

Last week saw a lot of volatility as the market was poised to react to all fundamental updates…however, the end of the week saw the early week gains reverse as the markets turned bearish once more.

 

UK Gas NBP Summer 23

p/therm

384.50

126.99%

-8.70%

UK Gas NBP Winter 23

p/therm

404.51

405.44%

-6.36%

UK Power Base Nov 22

£/MWh

495.29

244.96%

-9.37%

UK Power Base Summer 23

£/MWh

307.68

90.63%

-5.22%

UK Power Base Winter 23

£/MWh

333.12

274.84%

-6.15%

Carbon EUA Dec 22

€/tonne

69.85

-12.47%

-4.67%

Carbon UKA Dec 22

£/tonne

74.60

0.00%

-2.57%

Oil Brent Crude Nov 22

$/barrel

97.92

29.11%

8.74%

 

The one commodity that defied the weak close to the week was Brent crude, which off the back of OPEC+’s production cut announcement saw its Dec 22 contract rally 8.74% closing in on $100/barrel again. OPEC+ is set to slash production by 2 million barrels a day, leading to fear in the west that this will result in even tighter oil supplies over the winter period. The only real winner of this production cut announcement is Russia, who due to the fact that they are already producing less barrels than target, won’t have to reign in their production but will benefit from the increased oil prices. The EC announced towards the end of last week that they were closing in on a consensus agreement with regards to a gas price cap to help countries tackle the winter energy crisis. However, EFET criticised the premise, asserting that a price cap would merely result in supplies, particularly of LNG, being diverted to Asian markets where a price premium would end up being paid. Furthermore, EFET stated that “the price cap the gap between supply and demand and will lead to more rationing”. The French nuclear fleet remains only 50% operational, due to a combination of planned and unplanned maintenance works. This has been putting pressure on supply across Europe, yet the mild temperatures and unusually high wind generation weighed on the curve. Within power markets, gas supply concerns will remain the dominant driving force behind curve direction which will keep the risk premium high in the prompt markets.

 

Last Week’s Average Generation Stack

 

Gas

Wind

Solar

 

Hydro

Nuclear

Imports & Exports

Biomass

Pumped Storage

Coal

Total

GW

10.55

14.05

2.04

 

0.55

4.34

1.85

1.47

0.59

0.20

35.65

%

29.60

39.41

5.72

 

1.55

12.19

5.20

4.13

1.64

0.56

 

 

This Morning’s View

 

The announcement regarding whether or not the EC do decide to enforce a gas price cap will be a key fundamental that could emerge this week. Power and gas prices seem to be recoupling, with NBP prices once again being a good early indicator of the direction UBL is likely to move. Finally, providing the mild weather holds up this week DA prices should remain slightly bearish.

 

Wider news

 

Spain's gas imports rise 3.3% in August from the same month a year earlier | Reuters

FTSE 100 falls as Kyiv explosions spark risk-off mood | Reuters

 

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