Weekly UK Insight – 22 March 2021

The April 2021 Gas fell 9.3% to 43.10 p/therm last week following the end of unplanned Norwegian outages and an expected rise in temperatures. The gas system was oversupplied last week from a return to expected LNG deliveries as high winds eased allowing ships to dock and offload, meanwhile demand forecasts weakened.

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The April 2021 Power fell 5.4% to £54.50/MWh last week, despite low renewable output, following the downward movement of equivalent gas prices and a healthy supply and demand balance.

The April 2021 12 Month Gas price fell by 6.0% last week to 47.19p/therm. Both Summer 21 and Winter 21/22 saw declines as supply concerns eased at the start of the week. Milder weather forecasts for March and the biggest daily drop in six months for Brent Crude prices provided further bearish pressure.

European Gas storage remains at its lowest level for the past 3 years with a further 2% decline last week. Meanwhile, UK Gas storage increased 2% last week. The UK is expecting 7 LNG deliveries this week.

The April 2021 12 Month Power price fell by 3.4% to £58.73/MWh last week following losses in gas, carbon and an ample gas supply. Some resistance was provided by a drop in renewable output, due to weak wind and solar generation. A small rise in coal also provided further support for Winter 21/22 prices.

Brent crude oil fell 6.8% to $64.53/bbl last week. Thursday marked five consecutive days of losses for Brent, a streak not seen since September 2020, while intraday losses of 6.1% were recorded.

This marked the largest daily fall since June 2020. Demand concerns arose after news came of more potential European lockdowns after Covid-19 cases rose for a third straight week. A draft proposal prepared by German Chancellor Angela Merkel looks set to extend the German lockdown until mid-April.

Pound Sterling edged down 0.4% last week with investors cautious over the country’s vaccination rollout as the EU is expected to deny authorisations to ship AstraZeneca’s Covid-19 vaccine and their ingredients to the UK until the drug maker fulfills its delivery obligations to the 27-nation bloc.

European carbon fell 2.2% to €41.84/tCO2 last week. Losses were seen across wider energy markets, providing less support for carbon prices, while it is thought traders looked to profit-take after recent record highs.

European coal prices rose by 3.8% last week to $71.30/tonne. In contrast to losses reported in carbon and gas markets. Benchmark Australian coal prices spiked after one of Australia’s key export hubs suspended operations for a fortnight, impacting the supply of coal on the global market.

Source: Beond Energy Markets

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