Day-ahead power prices reached a 30-month high in November, whilst strong gains were observed across gas contracts. Brent crude oil, API 2 coal and EU ETS carbon prices extended from last month’s gains to reach fresh multi-year highs.
Power prices climbed 9.0% to £50.9/MWh, reaching a 30-month high (£53.5/MWh) on 27 November, following a series of planned nuclear outages throughout the UK that tightened supplies and supported prices. Seasonal power contracts grew 3.2% on average last month. Summer 18 power expanded 3.8% to average £44.4/MWh, growing from £42.8/MWh the previous month. Winter 18 power lifted 3.7% to £49.6/MWh and grew to a two-year high of £50.4/MWh on 24 November.
Day-ahead gas prices rose 14.8% to average 52.2p/th, increasing from 45.5p/th in October. Prices were supported by tighter supplies and higher demand in winter months. All seasonal gas contracts experienced gains in November, as contracts from summer 2018 out to winter 2020 lifted 3.9% on average. The largest gains were observed in the summer 18 gas contract, which increased 5.2% to average 44.5p/th. On 27 November the contract rose to 45.70p/th, exceeding a two-year high. Winter 18 gas rose 4.6% to 51.8p/th. Throughout the month, winter 18 gas reached 52.9p/th on 27 November, its highest price since February 2015.
Coal reaches a four-year high, while oil and EU ETS carbon hit 28-month and 22-month highs respectively
API 2 coal prices lifted 3.0% to average $85.0/t in November. On 10 November prices reached $88.9/t, a fresh four-year high. Prices were supported by strengthening oil prices. Nevertheless, price gains were capped by weakening Chinese demand due to efforts to meet tough domestic air quality targets.
Brent crude oil prices rose 9.3% to average $62.6/bl throughout November, up from $57.3/bl the previous month. On 7 November prices reached a 28-month high of $64.1/bl. Early month highs owed to rising tensions between Saudi Arabia and Iran concerning recent conflicts in Yemen. Large periods of the month were dominated by expectations that OPEC and non-OPEC members would extend cuts to the end of 2018. EU ETS carbon prices grew 4.5% to average €7.6/t. On 6 November EU ETS carbon reached €7.9/t, a 22-month high, with prices boosted by burgeoning European coal demand.
The month-ahead: Power supplies across Europe to tighten this winter, says Entso-e
The European transmission system operator group Entso-e forecasts tight power supplies for the UK this winter. In its Winter 2017/18 Outlook, it claims in an event of cold spells, low renewables generation and low French nuclear output the country, along with many across Europe, could experience supply risks. Increased power imports are expected this winter as a result.
