Wholesale gas and electricity prices continued to drop on Thursday, which was welcomed. We are still very nervous about the macroeconomic situation and are seeing this reflected in exceptionally shallow curves for gas and attractive 3-year pricing for electricity.
On the generation side, renewables were almost 60% last week, which is great news. However, this is tempered by the fact that the wholesale electricity price is set based on the method of electricity production that is most expensive on any given day. Given the level of renewables production, this is a ridiculous system, but it is what we have.
| Gas: Gas prices fell across most contracts yesterday. Prompt prices lost value due to above average temperatures and high wind generation, which were compounded by a decline in domestic demand. Curve prices tracked the prompt with lower storage levels limiting further decline. Power: Power prices softened yesterday. Strong wind generation saw day ahead prices fall 14.7% day on day, with the prompt and curve contracts tracking losses in the NBP and carbon markets. Wind is forecast to generate 14.5GWs/day next week. Oil: Oil prices rose yesterday after a bullish morning was almost outweighed by profit seekers in the afternoon. Prices rose in the morning due to the US court’s block on President Trumps trade tariffs, stating the President had exceeded his authority, and hopes of further sanctions on Russia and Canadian wildfires threatening to lock in Alberta’s oil supplies. Carbon (EU ETS): The ICE Dec-25 fell to €70.94/t yesterday. The contract opened at €70.74/t this morning and is currently trading at €70.99/t. Carbon (UKAs): The ICE Dec-25 settled flat at £51.82/t yesterday. The contract has not yet started trading at the time of writing this morning. |
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