WEEKLY ENERGY MARKET REPORT: 2nd SEPTEMBER 2019
September 2, 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.
British wholesale natural gas prices moved further on the downside last week, by 1.8% on average, on the curve contracts mainly due to reduced levels of demand.
Power contracts closed the week almost flat. Strong renewables generation weighed on prices while a stronger carbon market added support on the curve contracts. In particular, carbon EU spot permits increased by 3.58% within-week before settling at €26.32/t.
On the wider energy commodity complex, oil prices spiked on Wednesday following the release of the EIA report that showed a 10m barrel reduction in US inventories. That added support on oil prices that settled at $59.25/bbl, a 3% movement on the upside.
On the Brexit front, the Pound is currently trading at relatively similar levels to the previous week, that is €1.10 and $1.21. We should expect to see some movement in the FX this week as we approach the Brexit deadline on the 31st October.
The UK energy market last week
- The British wholesale natural gas market moved further on the downside last week by 1.8% on the curve contracts, on average.
- Wind generation averaged more than 9GW during most days of the week, thus reducing reliance on CCGT generation.
- As of this morning, power prices trade lower on the back of strong wind generation and low levels of demand.
UK Natural Gas prices
The British wholesale natural gas prices dropped by 1.8% on the curve contracts on average, during last week due to the lower levels of demand.
Day-ahead closed the week at 23.00p/th, that is 15% lower, week-on-week, while month-ahead increased by 2.7% within-week and settled at 30.90p/th.
In terms of curve contracts, Win-19 fell by 3.9% before settling at 44.90p/th whereas Sum-20 dropped by 2.5% at 41.70p/th.
UK Electricity Prices
British wholesale power prices mirrored the natural gas movement. Prices dropped due to strong wind generation for another week and a decrease in underlying fuels.
Day-ahead increased by 6% and closed at £34.50/MWh while month ahead increased by 3.8% and settled at £42.40/MWh.
Win-19 settled at £52.05/MWh and Sum-20 at £47.19/MWh, a slight drop of 0.6% and 0.1% within-week, respectively.
The UK consumer confidence index has fallen by 3 points to -14 in August 2019 from the previous month. The uncertainty caused by Brexit and concerns over the global economic outlook influenced consumer sentiment.
what to watch this week
Outlook: This week we would expect the increased wind generation to continue. As for the UK gas system, it is expected to remain relatively tight as we enter the end of the maintenance period.
Friday September 06: The Q3 GDP growth rate for the European Area will be released. The increase in Q2 was 0.2% despite the contraction of the German economy in the same period.
Friday September 06: The US non-farm payrolls for August will be released. The job gain for July was 164 thousand.
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