Morning Report December 19, 2016
SECURITIES
Expectation
Oil
The oil prices continued up on Friday. The front month crude contract rose 1,19 USD/bbl before closing the week at 55,21 USD/bbl. The
oil is pushing for higher highs this morning in hopes of a solid production cut on the back of the OPEC agreement a few weeks ago. Oil
has meanwhile been up with 70 cent since Friday afternoon.
Gas
Though flows from Norway and imports from Belgium kept some downwards pressure on the British gas markets, spot prices gained in
Friday’s session. Prospects of cooler temperatures outweighed such bearish impact. Further out on the curve prices gained in line with
the oil market, though this upside was limited on nearer contracts. The NBP Summer-17 contract managed to gain 0,40 p/th, while the
NPB Winter-17 conract eddged down 0,29 p/th closing at 47,00 p/th. This morning the market opened on a downside.
Coal
The coal market opened at lower levels Friday. But during the day the coal prices followed the oil market’s movement upwards and
closed at day high despite that the strike threat in Colombia faded. The Cal-17 contract closed unchanged compared to Thursdays
close. The end of the Colombian strike is supporting the downside while the rising oil price are supporting the upside. It could be difficult
to break through resistance at 69 USD/t regarding the Cal-17 today.
Carbon
Emissions prices continued their downward adjustment in early trading on Friday with the Dec-16 benchmark contract hitting a low of
4,57 EUR/t. Seemingly the profit taking owing to the decision concerning the EU ETS reform sustained. However like in neighbouring
markets the sentiment changed later in the session. The Dec-16 contract managed to finish the week at 4,93, EUR/t, i.e. with a gain of
0,09 EUR/t compared to Thursday’s close. Any deelopment in today’s session might be limited in its upside as year-end is approaching.
Hydro
The weather forecasts this morning are significantly wetter than the forecasts Friday. According to the prognosis we can expect a very
wet period going forward. While the temperatures are still well above the norm (3,3 degrees) the precipitation level for the next period is
5 TWh above the normal level for this time of the year. This is supporting falling power prices at the Nordic market to day.
Germany
The German power market took its direction from a strong spot market due to low renewables output as well as stronger oil and coal
markets to post gains on its own. The Q1-17 contract settled at 36,81 EUR/MWh, up 1,42 EUR/MWh from Thursday. The Cal 17 contract
gained 0,57 EUR/MWh, closing at 32,01 EUR/MWh. These gains were seemingly exaggerated as they are wiped out in early trading
today.
Equities
Equities rose slightly last Friday, but the US market fell slightly back. Geopolitical concerns rose as China seized a drone in international
waters. Also in China, the housing prices are falling in 11 out of 70 cities, which is up from 7 cities last month. Today the IFO index from
Germany will be published and the expectations are that the growth will continue. There aren’t a lot of interesting data being published
this week and we expect the markets to oscillate around or slightly above the current level.
Conclusion
In Friday’s session the Nordic power market sustained its upwards trajectory from Friday. The Q1-17 contract gained further 0,53
EUR/MWh, settling at 32,30 EUR/MWh. With gains of 0,45 EUR/MWh the YR-17 contract closed at 26,25 EUR/MWh. Also here those
advances seem to have been overdone. Combined with a wetter outlook the market this morning opens on a significant bearish note
with losses on the front month and quarter being more than 1,80 EUR/MWh.
Spot
DK1
DK2
SE3
SE4
HEL
OSL
SYS
Forwards
DK1
DK2
STO
MAL
HEL
OSL
SYS
SRMC
Coal
Gas
Oil
17-dec
33,16
35,39
34,63
35,39
34,63
33,87
32,48
January
30,50
34,65
34,80
35,30
36,00
32,30
32,30
January
37,49
35,29
72,22
18-dec
32,07
33,93
32,87
33,93
32,87
32,21
31,65
Q1-17
32,12
35,50
36,60
36,80
38,85
32,50
33,85
Q1-17
35,58
35,29
72,26
19-dec
33,97
37,52
33,97
37,52
34,48
33,86
32,99
2017
27,40
29,93
28,53
28,83
32,45
24,60
26,25
2017
32,29
33,88
72,26
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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