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Ignite Energy Market report 29th July 2019

WEEKLY ENERGY MARKET REPORT: 29th JULY 2019

Ignite bring you the latest energy news across the UK and Europe. We track and analyse changes in the energy market to keep you informed and up to date. Here’s the latest news from the UK, Europe and the rest of the world.

The British wholesale power market has slightly softened across the curve during the last week. The heatwave in Europe caused the French and Dutch interconnectors to start exporting to the Continent due to planned maintenance at the French nuclear plants.

In addition, the natural gas market dropped steadily during the last week despite the fact that the hot temperatures boosted demand for gas-fired generation by around 50mcm above seasonal normal levels.  However, the system length was kept comfortable during all days of the week.

In terms of the underlying fuels, the carbon market almost reached €30/t as the available EU permits are due to drop by 33 million next month.  Oil prices also rose mid-week following an 11-million-barrel reduction in inventories on Thursday.

The UK energy market last week

  • The British wholesale power market slipped by 0.7% on average across the curve during the last week.
  • The power generation mix was heavily reliant on CCGT generation during most days amid relatively low renewables generation.
  • Prices opened mixed on Monday morning as we see carbon trading higher and we observe comfortable fundamentals.

UK Natural Gas prices

The British wholesale natural gas prices dropped by 0.6% on average from the previous week due to comfortable supply flows and despite increased levels of demand.

Day-ahead closed the week at 28.25 /th, that was 3.5% higher, week-on-week, while month-increased by 3.8% within-week and settled at 28.55p/th.

In terms of curve contracts, Win-19 settled at 51.40p/th and Sum-20 at 46.11p/th, a decrease of 1.5% and 1% for the two contracts respectively.

UK Electricity Prices

Power prices dropped last week amid the warm temperatures across the UK and the Continent.

Day-ahead rose by 2.7% and closed at £43.00/MWh while month ahead increased by 2.5% and settled at £40.60/MWh.

Win-19 settled at £56.99/MWh and Sum-20 at £50.43/MWh, a drop of 0.9% and 1.1% within-week for both contracts respectively.

Macroeconomics

The ECB kept interest rates unchanged at zero, but the main message was that interest rates might drop in the first half of 2020. In addition, the bank also indicated they are preparing for further quantitative easing.

what to watch this week

Outlook: Temperatures are likely to drop this week, however they expected to remain above seasonal normal levels. Wind generation started today at 2GW and is most likely to remain low during the week thus we should expect to see more reliance on CCGT.

Tuesday August 01: BoE interest rate decision. Current interest rate at 0.75%.

Friday August 02: US Non-farm payrolls for July. The job gain in the USA for the previous month was 224 thousand jobs.

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