Highest oil price since the summer of 2015
Focus week 49 2016
The OPEC states last week decided on
the details of the agreement that will limit global oil production. This has resulted
in drastic climbs in the oil price.
Here and now
Nuclear crisis in France lessens
Once again there were marked price
falls in the Nordic energy market last
week, and the falls over the last month
have now been so extensive that almost the entire price climb from earlier in the autumn has disappeared
again. Wet weather forecasts, falling
commodity prices and the prospect
of France being able to put some of
the shut down nuclear power plants
back into operation resulted in prices
falling even further last week. The Q117 contract fell by EUR 3.11/MWh and
closed at EUR 29.87/MWh on Monday,
while the YR-17 contract fell by EUR
2.55/MWh, closing at EUR 23.75/MWh.
A large proportion of the extensive
price climbs experienced by the
Nordic and all other North-West
European energy markets in the
autumn were attributed to the major
crisis in the French nuclear power
sector. Several of the country’s
nuclear reactors were shut down
for safety reasons, which resulted
in a major gap between supply
and demand, which needed to be
covered by other, more expensive
energy sources. However, it now
appears that the situation will soon
improve. On Monday, the French
Nuclear Safety Authority announced
Our recommendation
Monday’s news that the nuclear power situation in France looks set to improve could pave the way for further
price falls in the Nordic region. At the
same time, the weather forecasts currently seem to be staying wetter than
the norm for this time of year for at
least ten more days. We therefore believe that the prices will continue the
downtrend over the coming week.
that the operators will most likely be
permitted to restart seven reactors
within a short period of time. These
are the seven nuclear reactors for
which the safety risks have been the
lowest during the recent months in
which they have been shut down.
This means that the pressure on the
commodity markets will be reduced.
Demand for both coal and gas has
been high in recent months and both
coal and gas prices have fallen as a
result of Monday’s news.
Forward
Wk 48 (EUR/MWh)
Wk 49 (EUR/MWh)
Expectation (wk 50)
ENOMJAN-17
37.05
32.63
↘
ENOQ1-17
33.98
29.87
↘
ENOYR-17
26.30
23.75
↘
SYHELYR-17
6.28
6.65
↗
SYOSLYR-17
-1.65
-1.65
→
Saudi Arabia at the oil summit
Forecasts
Precipitation: The latest Nordic
weather forecasts indicate that
precipitation volumes will be
somewhat above the norm for
at least the next ten days. The
remainder of this week appears
wettest but the level could fall
slightly next week.
The OPEC states met last week to negotiate the details of the organisation’s
agreement to lower production. The member states agreed to cut production
by around 4% and, given that there had been fears of the agreement collapsing
completely, this outcome was considered a major success. The oil price has also
increased substantially since then and closed at its highest level since summer
2015 on Monday. Saudi Arabia took the lead at the meeting and will decrease its
production by 500,000 barrels per day. Iran, on the other hand, does not have to
limit its production at all.
Ongoing improvement in the hydro-balance
Production and spot: The average Nordic system price fell
slightly in week 48 and the average level was EUR 35.78/MWh
for the week. We anticipate approximately the same price level
this week. Wind power production somewhat above the norm
is expected for most of next
week.
The EPADs
The Finnish YR-17 EPAD increased again last week. It
closed at EUR 6.65/MWh on
Monday, EUR 0.37/MWh above
last week’s level. The Norwegian
NO1 EPAD for YR-17 remains at
EUR -1.65/MWh.
Peter Lønbro Lehm, Sales Director
([email protected])
Tel.: 8742-6720
Following several weeks of precipitation volumes higher than the norm for this
time of year in the Nordic region, the major hydro-balance deficit has also decreased greatly. At the end of October the deficit was 26.5 TWh but the level has
since fallen and the deficit is now only 10 TWh. The deficit remains large but it
seems likely that it will fall further in coming weeks as the wet weather looks set
to continue.
Michael Bendixen, Customer Manager
([email protected])
Tel.: 8744-6790
Communicative Analyst
Karsten Sander Nielsen
([email protected])
Tel.: 8745-6948