August 2021 Energy Market BriefUK Energy prices find new market highs, as prices continue their upward trend
Annual Gas Prices
Annual Power Prices
In July 2021, all tracked wholesale GB gas contracts rose, with the most pronounced rises observed across near-term contracts, continuing recent trends. Gas prices across the board remained comfortably above their levels seen at the same time last year, underpinned by high underlying commodity markets and tight supply-demand fundamentals. Notably, low European gas storage levels and high gas-for-power demand supported GB gas prices.
On average, seasonal gas contracts from winter 21 to winter 23 were 9.9% higher in July than in June, with prices collectively ending the month higher than they were at the month’s start. Winter 21 rose 20.4% to average 94.53p/th, while winter 22 gas lifted 8.0% to 62.66p/th.
Wholesale power contracts largely shared the bullish trends observed in gas markets, with some exceptions in longer-dated seasonal contracts.
Seasonal power contracts up to and including winter 23 moved higher, rising 4.3% on average in July. Winter 21 rose 12.4% to £96.73/MWh, while summer 22 rose 7.2% to £64.03/MWh. The annual October 21 power contract rose 10.3% to average £80.38/MWh.
Forwards power contracts were supported by bullish gas and international commodity markets. EU and UK ETS prices remained high in July, supported by continued tighter European gas markets, delays in free EUA allocation and expectations of ~50% reductions in EU and UK ETS auction volumes for August.