Energy Market Report - Nov18
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Energy Market ReportsEnergy Market Report - Nov18

Energy Market Report - Nov18

Ian Mckenna

by Ian Mckenna 08 November 2018

Report Summary:

Wholesale prices fall as winter approaches

key-market-indicatorsEnergy Market Brief - November 2018

Many wholesale power and gas contracts fell for the first time since June, following commodities lower as high LNG imports and comfortable power and gas supplies gave some relief as we move into winter.

Looking towards power contracts for delivery in the near-term, day-ahead power went down 4.3% to average £64.8/MWh in October, the first monthly decline since June. Prices fluctuated throughout the month amid volatile renewables output, which when wind output  is low acts to push wholesale costs higher as more expensive forms of generation are required to meet demand. The contract dropped to a one-month low of £61.3/MWh on 22 October amid forecasts of higher wind generation the following day.

All seasonal power prices fell in October, down 2.7% on average. Summer 19 lost 3.1% to average £58.8/MWh, hitting a nine-week low of £56.1/MWh on 29 October. Contracts have been pressured by falling gas and commodity prices, with EU ETS carbon falling below €16.0/t. The cost of emitting carbon is factored into the cost of power generation, meaning lower EU ETS carbon prices lead to lower power prices.

Day-ahead gas dropped 9.8% to average 66.9p/th in October, also the first monthly decline since June. Day-ahead gas went as high as 72.3p/th on 2 October but fell to a 10-week low of 63.0p/th on 31 October as several LNG cargoes came to UK terminals towards the end of the month, boosting supplies. Most seasonal gas contracts decreased in October, falling 1.0% on average. Summer 19 gas fell 1.7% to average 61.6p/th, falling to an eight-week low of 66.8p/th on 31 October.