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10/10/2022 - Weekly Wholesale Market Update

Updated: May 2, 2023

This morning, the Electric wholesale (Day Ahead) prices have opened up 35.86% higher than this time last week with Gas (Day Ahead) 20.81% higher.


A rather quiet week for markets, with sideways movement along the curve and prices that appear to be stabilising. Front month NBP down by 2.87% week over week while Baseload decreased by 5.14%. Apr-12m annuals had less to offer as Elec contracts weakened by just 0.85% over the week and Gas equivalent increased by 1.48%. Losses were aided by price reductions throughout the whole fuel mix, with JKM LNG down 11% week over week and coal prices down 20%. The two exceptions, Brent and Carbon, saw oil rise by more than 10% and EUAs rise by 4.45%.



In addition to coal, a rush of cargoes, mostly from the US, arrived into Europe, which contributed to the loss of LNG. In Europe, about 70% of US exports go, up from 56% and 63% in July and August. Despite the fact that overall US exports from the first eight months of 2022 were lower than typical due to outages, this was the case. The market forecasts a significant increase in supply, which will assist down front-month pricing as Freeport LNG will nearly totally reopen next month.



Discussions of a prospective pricing cap, either at the local government level or across the EU, had an impact on coal prices, and Poland pledged to impose discounts for households. While this is going on, the EU is looking into options to replace earlier suggestions that included capping Russian gas prices or restricting fees for using gas to generate power, suggesting that a "dynamic price corridor" may be developed for the industry. The corridor would be aimed at the wholesale rate, but its main goals would be to reduce inflationary pressures and excessive profits while still permitting transactions above the reference price "if necessary."



OPEC+'s stubborn 2 million barrel production cut, which was higher than anticipated and defied US pressure on Saudi Arabia to restrain oil prices in an effort to strategically weaken Russia, helped Brent prices rise.



The outlook for the markets this morning is negative, with Dutch TTF falling 11%, UK Baseload Q1-23 requesting a £30/MWh discount, front-month NBP wanting a similar 13p/th discount, and BoM pushing harder to shave off 75p/th.




How the market has opened each day:

DAY AHEAD PRICES

Gas (pence per therm)

Electric (£ per MWh)

03/10/2022

149.00

145.00

04/10/2022

125.00

130.00

05/10/2022

125.00

91.00

06/10/2022

195.00

135.00

07/10/2022

180.00

167.00

10/10/2022

180.00

197.00


7 day averages


Electric (£ per MWh) 144.17

Gas (pence per therm) 159.00


The below shows how the market compares to the previous week, month and year.






 



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