WEEKLY ENERGY MARKET REVIEW

Transcription

1 WEEKLY ENERGY MARKET REVIEW WEEK 50, 2017

2 Last Week at a glance! BRENT M+1 GAS TTF Y+1 POWER GE Y $/bbl /MWh /MWh The oil price rose, driven by the rise of the Chinese oil imports and the geopolitical tension in the Middle East. The price rose, stimulated by a technical defect at the Forties Pipeline System in the UK and the explosion at the Austria s main gas pipeline hub. The price rose pushed by the upward continuation of the coal prices and the rise of the gas and oil prices. Outlook: Outlook: Outlook: A test of the resistance level of $/bbl. A rise towards the resistance level of /MWh. A rise towards the resistance level of /MWh. 2

3 HIGHLIGHTS Evolution of main energy products in the last week % : Average of prices of working days of Week -1 vs. Week -2 UK Power BL Y+1-1.5% Poland Power BL Y+1 1.3% Spain Power BL Y+1 1.0% Italy Power BL Y+1-0.1% Netherlands Power BL Y+1 0.9% Germany Power BL Y+1 1.0% France Power BL Y+1 1.7% Netherlands Gas TTF Y+1 0.4% France Gas PEG Nord Y+1 0.2% Germany Gas NCG Y+1 0.4% UK Gas NBP Y+1-1.5% Poland Gas Y+1 0.0% Italy Gas PSV Y+1 0.4% Coal API-2 Y+1 2.7% CO2 Dec % Gasoil M+1-0.6% Brent M+1-0.7% -5% 0% 5% 10% 15% 20% 25% 30% 3

4 OVERVIEW Last week, the European currency continued its decline against the U.S. dollar, driven by a better than expected value of the U.S Nonfarm Payrolls for November. This week, the main economic events in the European Union are the announcement of the ECB Deposit Rate Decision, the ECB Monetary policy statement and the following press conference Exchange Rates: /$ US EUROSTOXX

5 OVERVIEW The purchasing managers index is a composite indicator of a country's manufacturing activity. It takes into account order intake, production, employment, shipments and stocks in the manufacturing sector. PMI < 50: contraction in the activity PMI > 50: expansion in the activity PMI: US China Germany PMI - Germany PMI - China PMI - US 5

6 OIL The oil price rose, driven by the rise of the Chinese oil imports and the geopolitical tensions in the Middle East. China s crude oil imports rose by 1.7 Mbl/d or 24 % to around 9.01 Mbl/d in November compared to the previous month. In the first 11 months of 2017, China s oil imports rose 12 % compared with the same period of The main reason for this increase is the rise of the imports of the teapot refiners and the filling of the strategic oil reserves. Jefferies expects that China will contribute 10% or 150,000 bpd of the global crude oil demand growth in According to Reuters, Britain s largest oil pipeline could shut down for weeks for unscheduled repair work. The Forties Pipeline System, which carries around 450,000 barrels per day of Forties crude from the North Sea to the Kinneil processing terminal in Scotland, had been operating at reduced capacity since December 7 when a routine inspection revealed a small leak. The pipeline, which handles nearly a quarter of total North Sea crude output, is also a major route for bringing natural gas to Britain that has been produced offshore Brent Oil M+1 - $/bbl Gasoil M+1 - /ton

7 OIL The WSJ reported that Houston is beginning to rival Cushing, Oklahoma in terms of its importance as an oil hub in the physical market for crude, as well as its significance in the oil futures market. The reason is that the U.S. has become a significant oil exporter, and a lot of oil is flooding from the Permian straight to Texas ports in and around Houston, reaching the global market without ever being routed through Cushing OPEC Crude Oil Production Mbbl/day US: Crude Oil Stocks Mbbl (source: EIA) 7

8 COAL The European coal price rose, driven by a strong Asian demand as besides China, South Korea and India are very active on the market. In Europe, coal stocks at 4 of the continent s key northwest dry bulk terminals declined by 8 % on the week to 4.89 Mt the lowest level since mid-october. Nearly all European coal-fired power plants will be unprofitable by 2030, think-tank Carbon Tracker Initiative said in a report. The main causes for a such decline will be the lowering costs of the renewable generation as well as air pollution policy and rising carbon prices. Since the majority of coal units are loss-making by 2030, the EU could avoid 22 billion euros ($26 billion) in losses by phasing out coal power in line with the Paris Agreement, Carbon Tracker said. COAL API2 (In USD/ton) Y+1 Y+2 Y+3 8

9 CO2 The CO2 price lost more than 5 % over the week as traders began to close positions ahead of the expiry of the 2017 benchmark contract on 18 December. The power industry lobby group Eurelectric denied the need for a CO2 price floor in a declaration published last week. The group considers the ETS reform as the main driver to ensure an increase in renewables or energy efficiency measures. It will be worng to bring something new in place before the ETS starts working, Eurelectric president Francesco Starace, who is also a CEO of Italian energy group Enel told in a press conference. EU CARBON (In EUR/ton) EUA Dec 17 CER Dec 17 9

10 NATURAL GAS Natural Gas Storage Total EU 28 : Date: % 83% 78% 65% 77% 82% 60% 76% 83% 49% 72% 10

11 NATURAL GAS LNG Storage Total EU 28 : Date: % 67% 52% 45% 58% 41% 56% 49% 11

12 NATURAL GAS Oil linked natural gas premium at 5.61 EUR/MWh 26 Oil linked natural gas price (EUR/MWh) Oil linked gas price Cal Y+1 Evolution Trend Dec % Dec TTF gas Cal Y+1 Oil linked gas price Cal Y+1 Premium [Oil linked gas] - [ZEE TTF average] 12

13 13/12/ /12/ /01/ /01/ /02/ /02/ /03/ /03/ /04/ /04/ /05/ /05/ /05/ /06/ /06/ /07/ /07/ /08/ /08/ /09/ /09/ /10/ /10/ /10/ /11/ /11/ /12/2017 NATURAL GAS Last week the TTF price declined, driven by a strong wind generation, warm weather and a good level of supply. However, at the beginning of this week the price rose again pushed by a cold weather front. Also on the supply side, the gas flows are today strongly reduced by unplanned outages at the Norwegian gas fields Oseberg and Valemon, the breakdown of British Forties pipeline system and the explosion at the Baumgarten gas hub in Austria which caused a huge price increase TTF SPOT EUR/MWh Market Average Period Price /MWh Month M-12 November Month M-1 October Month M November Current Year Year Y

14 NATURAL GAS The TTF futures repeated the oscillations seen for the spot price. During the past week, the prices fell, driven by the bearish correction of the spot price and reaching a few strong resistance levels. Today, the prices rose again pushed by the outages at the British Forties pipeline system which are supposed to last for several weeks and by the explosion at the Baumgarten gas hub TTF Forward Prices EUR/MWh Spread /MWh 12-Month moving average Last Week average TTF Y+2 vs Y TTF Y+3 vs Y TTF Y+1 TTF Y+2 TTF Y+3 14

15 1/10/2017 1/24/2017 2/7/2017 2/21/2017 3/7/2017 3/21/2017 4/4/2017 4/18/2017 5/2/2017 5/16/2017 5/30/2017 6/13/2017 6/27/2017 7/11/2017 7/25/2017 8/8/2017 8/22/2017 9/5/2017 9/19/ /3/ /17/ /31/ /14/ /28/ /12/2017 NATURAL GAS An explosion at Baumgarten, the Austria s main gas pipeline hub, which happened on 12 December, killed one person and injured 18 others, causing Italy to declare a state of emergency due to a lack of gas supplies. The hub is important for European gas transit, with natural gas transported to Baumgarten via Slovakia and Germany along several cross-border pipelines. Slovakia s main gas transit route to Austria was suspended after the fire, Slovak pipeline operator Eustream said. Russia s Gazprom Export said it was working on redirecting gas flows and trying to secure uninterrupted supplies to clients. Traded continental gas volumes on European brokered markets rose 7% in November, compared with the same month last year, to 2,118 TWh, data from the London Energy Brokers Association showed on Friday. The rise was led by a 14 % spike in TTF volumes to TWh which compensated a 13 % decline on the NCG hub to 147 TWh. Main European Hubs Gas Prices EUR/MWh TTF Y+1 NCG Gas Y+1 IT PSV Gas Cal Y+1 PEG Nord Y+1 NBP Gas Futures GBP/therm Spread vs TTF 12-Month moving average Last Week average PSV (IT) PEG NORD (FR) NCG (GE) NBP Sum2018 NBP Win

16 NATURAL GAS Asian LNG price rose above 10 MMBtu, driven to a 3-year high by Chinese and Japanese deals, weather-driven demand and tight supply. Tight shipping availability and rising freight rates constrained Asia s ability to draw in supply from the Atlantic Basin, adding strength to price gains as several production plants underwent maintenance. Novatek launched last week the first production train at its Yamal LNG project. The project is located on the remote Yamal Peninsula and consists of three trains, each with nameplate capacity of 5.5 million mt/year of LNG. The second and third trains are expected for launch in the third quarter of 2018 and the first quarter of 2019, respectively, ahead of the initial plan. The first LNG cargo was sold to the UK-based LNG trading subsidiary of Malaysia's state-owned Petronas. JERA Co the world s largest buyer of LNG is in talks on collaborating on the super-cooled fuel with the trading arm of France s statecontrolled utility EDF, a spokesman at the Japanese company said. The comment came after a Japanese regional daily, the Chunichi Newspaper, reported JERA is in talks to buy the French company s LNG operations. Previously JERA bought the French company s coal and freight trading business.. Henry Hub (USA), TTF (EU), JKM (Japan) SPOT USD/MMbtu LNG Asian Weekly Spot Natural Gas Henry Hub Natural Gas TTF 16

17 ELECTRICITY The German spot price declined, driven by a strong wind output. At the beginning of this week, the price rose again, stimulated by the cold weather and the general rise of the energy commodities. German Power Day Ahead Baseload EUR/MWh MARKET AVERAGE PERIOD PRICE /MWh Month M-12 December Month M-1 November Month M December Current Year Year Y

18 ELECTRICITY The German futures rose following the bullish continuation of the coal prices. Germany s Social Democrats will consider a proposal for the closure of up to 5 GW of coal and lignite units as parts of the upcoming negotiations with CDU/CSU alliance. SPD leader Martin Schulz said recently that Germany needs to close its coal generation fleet to reach its climate goals but the country could not put its supply security at risk.. German Power Futures EUR/MWh MONTH LAST WEEK SPREAD /MWh MOVING AVERAGE AVERAGE GE BL Y+2 vs Y GE BL Y+3 vs Y GE Power BL Y+1 GE Power BL Y+2 GE Power BL Y+3 18

19 ELECTRICITY Central Western Europe Electricity Futures French ASN ordered to EDF to improve technical controls and checks at its Cruas nuclear plant (3.7 GW) and to elaborate an action plan in 4 months to address the safety issues. Earlier EDF announced capacity cuts and short term outages at its Tricastin 2 reactor in order to postpone its next scheduled maintenance stop to early Also, EDF confirmed the definitive closure of the Fessenheim nuclear power plant on 1 January French utility EDF announced its plan to install in France 30 GW of solar capacity, doubling in this way its current renewable capacity. This would represent around EUR 25 bn of investments and will require the participation of banks and other company s financial partners. The group s CEO specified that this new «solar plan» will not affect the company s other investments. Central Western Europe Futures EUR/MWh German Power BL Y+1 Belgium Power BL Y+1 France Power BL Y+1 NL Power BL Y+1 SPREAD VS GE POWER 12-MONTH MOVING AVERAGE LAST WEEK AVERAGE BE FR NL

20 ELECTRICITY WEEKLY MARKET REVIEW Week 49, 2017 Central Eastern Europe Electricity Futures The Hungarian Central Bank granted HUPX group an operated license for its new trading platform expected on 3 January. The main difference with the new platform is that electricity products currently traded as physical futures will instead be settled financially with option for physical delivery. The platform will be classed as an organized trading facility under MiFID rules which means deals will not count towards thresholds that, if crossed, would see trading companies more strictly regulated. Central Eastern Europe Futures EUR/MWh German Power BL Y+1 Polish Power BL Y+1 Romanian Power BL Y+1 Hungary Power BL Y+1 Czech Power BL Y+1 SPREAD VS GE POWER 12-MONTH MOVING AVERAGE LAST WEEK AVERAGE PL RO CZ HU

21 ELECTRICITY WEEKLY MARKET REVIEW Week 49, 2017 Electricity UK - Nordpool South Korean state-owned energy firm Kepco has been declared the preferred bidder for the NuGen consortium, which faced trouble after the Japanese owner Toshiba was hit multiple financial problems. NuGen planned to build a nuclear power plant of up to 3.8 GW gross capacity at Moorside in West Cumbria. The commissioning of the Moorside plant is now "likely to be towards the end of the 2020s or the 2030s" UK POWER SEASON +1, +2 GBP/MWh NORDPOOL Y+1 EUR/MWh UK Sum18 UK Win

22 ELECTRICITY WEEKLY MARKET REVIEW Week 49, 2017 Electricity Spain - Italy Spain will become in 2018 an European leader in the installation of new solar capacity with around 1.4 GW of installations, according to a report from GMT research. The Netherlands, France and Germany will be the only other European countries to grow their solar capacity by more than 1 GW next year. SPAIN Y+1 EUR/MWh ITALY POWER BASELOAD Y+1, +2 EUR/MWh Y+1 Y+2 22

23 10/01/17 24/01/17 7/02/17 21/02/17 7/03/17 21/03/17 4/04/17 18/04/17 2/05/17 16/05/17 30/05/17 13/06/17 27/06/17 11/07/17 25/07/17 8/08/17 22/08/17 5/09/17 19/09/17 3/10/17 17/10/17 31/10/17 14/11/17 28/11/17 12/12/17 10/01/17 24/01/17 7/02/17 21/02/17 7/03/17 21/03/17 4/04/17 18/04/17 2/05/17 16/05/17 30/05/17 13/06/17 27/06/17 11/07/17 25/07/17 8/08/17 22/08/17 5/09/17 19/09/17 3/10/17 17/10/17 31/10/17 14/11/17 28/11/17 12/12/17 ELECTRICITY WEEKLY MARKET REVIEW Week 49, 2017 Short Range Marginal Cost SRMC stands for Short Range Marginal Cost and represents the marginal cost to generate electricity from either coal or natural gas. On the first graph, we compare the SRMC coal with German Baseload Power, and on the second the SRMC gas with German Peakload SRMC COAL vs GERMAN BASELOAD EUR/MWh SRMC API-2 Y+1 German Power BL Y+1 SRMC GAS vs GERMAN PEAKLOAD EUR/MWh SPREAD SRMC Coal API-2 vs German Power Baselaod Y+1 Gas NCG Y+1 vs German Power Peaklaod Y+1 TECHNICAL ASSUMPTIONS 12-MONTH MOVING AVERAGE LAST WEEK AVERAGE GAS COAL Efficiency Factor 50 % 36 % Management Cost SRMC NCG Y+1 German Power Peaklaod Y+1 23

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