Morning Report May 9, 2017
SECURITIES
Expectation
Oil
For a second straight session, the crude oil market edged up yesterday. There appears to be a feeling on the market that the big losses
last week were a bit overdone, and that there needs to be a minor upwards adjustment. The market does however remain below the 50
USD/bbl barrier, which was breached last Thursday. The Brent front month contract closed Monday at 49,34 USD/bbl, up 0,24 USD/bbl
against the previous close. We expect a largely neutral session Tuesday.
Gas
On the European gas markets, prices have started to fall sharply and Monday, the long-term contracts edged down for a fourth day in
a row. The British NBP Winter-17 contract is now very close to a year-low, settling the day at 44,91 p/th, 0,69 p/th below Friday’s close.
Warmer weather forecasts and a weakening euro compared to the British pound are the main reasons behind the contract’s downside.
Coal
The European coal market remains under pressure. High inventory levels and a weak demand both in Europe and in Asia causes the
bearish sentiment to continue. When demand is as low in Europe as it is the case currently, it takes support from Asia to keep a hand
under the market. This support does not come right now.
Carbon
Monday was bearish on the European market for CO2 quotas, with falling power prices and an expected increase in auction supply
causing the market to edge down. The expected amount of quotas that will be auctioned this week is 22,1 million, more than 4 million
higher than last week. The benchmark quota contract is very close to the year-low from a couple of weeks ago, closing yesterday at
4,42 EUR/t, 0,16 EUR/t below Friday’s close.
Hydro
This morning, the Nordic weather forecasts are a little wetter than what we saw yesterday, with expectations of a low approaching from
the west in the beginning of next week. Except for a couple of dry days this weekend, precipitation amounts are expected to be above
average. This also means that the hydro balance could once again improve and that the deficit should decline a bit. Temperatures are set
to increase, but to remain below average during the next ten days.
Germany
Falling coal, gas and carbon emission prices were the decisive factors for the German power market yesterday, where the bearish sentiment returned after a single day of upside Friday. The Cal-18 contract fell below 29 EUR/MWh for the first time since March, and the
market is currently very influenced by the downturn on the fuel markets. We could potentially see further losses today.
Equities
Despite Emmanuel Macron’s victory in the French presidential election, the European stock markets fell in Monday’s trading. It appeared
as if the market had already accounted for Macron’s win during the previous sessions. Friday’s strong job report from the US also failed
to make an impact in Europe. Instead, the Stoxx600 Index ended up falling 0,13 %.
Conclusion
The range-bound trading continued on the Nordic power market yesterday, with only very limited fluctuations. The Q3-17 contract rose
0,05 EUR/MWh, closing at 23,65 EUR/MWh, due to marginally drier and cooler weather forecasts, while the YR-18 contract was down
0,10 EUR/MWh, closing at 23,10 EUR/MWh on weaker fuel markets. The market seems very reluctant to make any fluctuations at the
moment, but we expect a slight downside Tuesday due to some wetter forecasts arriving this morning.
Spot
DK1
DK2
SE3
SE4
HEL
OSL
SYS
Forwards
DK1
DK2
STO
MAL
HEL
OSL
SYS
07-maj
28,33
28,34
28,27
28,27
28,22
28,53
08-maj
30,06
30,04
29,98
29,98
29,98
30,24
09-maj
35,92
35,92
35,14
35,14
35,14
33,37
SRMC
Coal
Gas
Oil
28,31
June
25,15
26,03
23,45
24,15
26,55
23,90
30,09
Q3-17
27,70
29,05
26,65
26,95
29,95
24,05
23,65
June
32,21
28,22
68,63
23,95
Q3-17
31,73
29,09
34,75
2017
24,75
26,58
25,00
25,20
28,03
22,74
66,96
23,10
2018
29,14
31,76
66,96
SRMC 2017
EUR/MWh
0
-5
-10
-15
EUR/MWh
32
30
28
26
24
22
20
18
16
14
12
08-02-2016
DARK Spread (coal)
SPARK Spread (gas)
Forward price
ENOQ4-16
ENOYR-17
08-05-2016
08-08-2016
The Morning report is produced on the basis of information about th Nordic power market from sources which Energi Danmark A/S finds reliable. We attempt to continuously keep data correct and up to date. Energi Danmark A/S assume no responsibility for the accuracy of the contents of this report. Energi
Danmark A/S makes reservationsfor typing errors, calculation errors and asume no responibility for any loss or damage arising from the direct or indirect consequences following use of this material. Estimates and recommendations can be changed with no prior notice or warning. The report is confidential
and only intended for clients of Energi Danmark A/S. Information contained in the report is of general nature and cannot be defined as advice. Readers are urged to seek closer advice in relation to specific questions. This material is not to be published or in any other way passed on for unauthorized use.
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