Tuesday’s trading on the UK wholesale electricity market partially corrected the huge jumps that contracts had made on Monday as market uncertainty over Ukraine’s situation abated slightly.
Although retracing some of the gains from Monday’s trading, many contracts did not return to the levels around Friday’s end-of-day ICIS assessments despite the presence of several weak fundamentals to drive contracts down.
According to one source, the power curve returned approximately two-thirds of the increase from Friday’s end-of day value, suggesting some remnant of uncertainty was still shrouding the market.
Both the front month and front season closed the day around £1.00/MWh above where ICIS assessed the contracts at the close of trading on Friday, shedding in excess of £2.00/MWh across the day.
Asked whether the remaining value attached to Monday’s session would be eroded, the source said it was dependent on the situation in Ukraine stabilising further and that another rumour could see the market react bullishly again. “Any perceived aggression moves the market,” the source said.
However, the day’s trading was not entirely defined by weakness. Baseload contracts opened the session markedly down on Monday’s close, reflecting the market’s confidence in a more stabilised situation in Ukraine.
But a series of bids through the morning helped lift the front month and season on the power curve, with trades on dirty spark spreads also helping to bring power up as corresponding NBP contracts declined.
By the afternoon, however, fundamental weakness was feeding back into the power curve from the bearish feel to NBP contracts as they too plunged in reaction to the Ukrainian situation and increased gas flows from the continent to the UK.
Some seasonal far-curve contracts retraced all of Monday’s gains. Both Summer ‘16 and ’17 were assessed by ICIS down on Friday’s close of trading, reflecting the fact that “the front had most to give back”, as the source put it.
And it was on the prompt that the largest day-on-day loss was evident, as the Weekend Baseload contract shed £3.65/MWh of value. Another source mentioned the prospect of a continued bearish weather outlook playing into weakness on the prompt while remarking that there was a little less wind expected beyond Wednesday’s session, in which generation is forecast to hit a peak of 4GW, according to National Grid data.
E.ON’s remit data also reveals that Unit 2 of the Ironbridge power plant will come back on line towards the end of Wednesday, following a fire early last month. Henry Evans