On Thursday, wholesale gas and electricity prices were a mixed bag, with near-term pricing dropping but pricing further out rising. Nowhere near the size of the changes in recent days, but welcome news to see some negatives coming back into the market. As the situation in the Middle East develops and, hopefully, calms down, we expect to see more price reductions in the wholesale markets for both gas and electricity.
On the generation side, pricing was broadly in line with the previous week, albeit that renewables were at 38% this past week. Again, as the input prices for fossil fuels drop back, we expect the generation price to also drop back. Don’t forget that the generation price is governed by the highest individual unit, so if fossil fuels are the highest-priced, everything is priced at that level, including renewables! It is a completely screwed-up system, but that’s how it works.
| Gas: Gas prices fell in the prompt yesterday on the easing of near curve pressure. Centrica declared that the business had been selling gas over the first half of the year, contributing to supplies. Curve prices continued to rise as the market priced long-term risk over supply disruptions. Prices have opened softer this morning. Power: Day ahead prices fell as high renewables generated above their averages (Wind & Solar). Near curve prices fell on the easing of Gas and Carbon, as Carbon fell 2.1% on the day. However, the further out curve rose alongside Gas. Prices have opened slightly bearish this morning. Oil: Oil prices have continued to rise, reaching $100/barrel yesterday. Attacks on two Saudi Arabian oil tankers heightened concerns over global supplies and extending the exchange of strikes to five days. Prices have softened slightly in this morning’s early trading window but remain on track for a 10% weekly gain. Carbon (EUAs): The ICE Dec-26 traded to €83.88/t last night. The contract opened this morning at €84.00/t. Carbon (UKAs): The ICE Dec-26 fell to £61.33/t yesterday, opening this morning at £61.50/t. |
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