Morning report - May 22, 2017
Fundamental
factors
Strong
bullish
Bullish
Neutral
Bearish
Strong
bearish
Market update
Expectation
Discussion
Oil
Prices continued to rise on the international crude oil markets Friday, where the Brent front month contract
edged up another 1,10 USD/bbl, settling at 53,61 USD/bbl, the highest price level for more than a month. The
market has now increased by around 8 % during the last weeks, as expectations are high that OPEC and
Russia will extend supply cuts, something which will tighten the market globally despite the high output in the
US. We expect further gains Monday.
Gas
On the European gas markets, prices fell marginally on the short end of the curve Friday, while long-term
contracts continue to rise. LNG supply is decreasing a bit, and the strengthened oil market adds to the upside
for the far end of the curve. The British market has now been rising for around a week, after hitting a year-low
price level early last week.
Coal
It has become more profitable to use coal for electricity production in Europe. Profit margins have been rising
over the last weeks, and this has been a major factor why coal prices are rising steadily. Friday, the API 2 Cal18 contract rose 0,46 USD/t, settling at 65,94 USD/t. The market also keeps focus on the weather conditions in
Australia. There is still some fear that heavy rainfall will hamper the country’s coal export this week.The market
does however appear to fall early Monday.
Carbon
The European CO2 quota market continued to rise Friday, and the benchmark quota contract has now
increased by almost 10 % during the last couple of weeks. The widening profit margins for coal fired power
generation has led to increased buying interest on the quota market as well. This does however not change the
fact that there continues to be a heavy oversupply of quotas of up to 2 billion on the market.
Hydro
The weekend has not changed the fact that the Nordic weather forecasts are very dry at the moment. The next
week or so, there are only expected minimal amounts of precipitation. From the weekend and on, we could see
a bit more rainfall, but not more than what equals seasonal normal. The hydro balance therefore remains in a
deficit, which is expected at 1,2 TWh in two weeks’ time. Temperatures are expected just around seasonal
average.
Germany
On the German power market, prices rose for a fifth straight session Friday, marking a noticeable rebound after
a month with a general downtrend. The rising prices across the fuel market has caused the market to enter a
bullish phase, with the country’s Cal-18 contract Friday rising another 0,18 EUR/MWh, closing at 29,75
EUR/MWh.
Equities
Following a couple of bearish sessions during the previous days, the international stock markets rebounded a
bit in Friday’s trading. A leading Fed member indicated that there will might be a postponement of the expected
US interest rate increase.
Conclusion
Friday, the Nordic power market continued the upside as rising fuel prices and dry forecasts led to another
bullish day on the market. The Q3-17 contract rose 0,25 EUR/MWh, settling at 23,25 EUR/MWh, while the YR18 contract was up 0,05 EUR/MWh, closing the day at 23,05 EUR/MWh. The first indications Monday do
however not show further gains and we expect a largely neutral sentiment, with only minor adjustments
compared to Friday’s close.
Spot
20-maj
21-maj
22-maj
EUR
DK1
24,02
20,56
35,01
DK2
24,06
20,86
35,01
SE3
24,02
18,78
31,53
SE4
24,02
18,78
32,67
HEL
24,13
19,17
35,01
OSL
23,77
18,78
25,87
SYS
23,82
18,94
27,88
EUR
Forwards
June
Q3-17
2017
DK1
25,25
27,75
24,50
System Spot
EUR/MWh
60
DK2
26,13
28,50
26,58
STO
23,70
26,63
24,90
MAL
23,70
26,90
25,23
HEL
26,45
30,05
29,53
OSL
23,70
23,75
23,00
SYS
23,45
23,65
23,05
EUR
SRMC
June
Q3-17
2018
Coal
33,55
33,10
29,89
Gas
28,38
29,28
32,06
SRMC 2017
EUR/MWh
0
50
-5
40
DARK Spread (coal)
30
20
SPARK Spread (gas)
-10
10
0
Serie1
-15
Forward price
EUR/MWh
35
30
25
20
15
03-11-2016
ENOQ3-17
ENOYR-18
03-02-2017
The Morning report is produced on the basis of information about the Nordic power market from sources which Energi Danmark A/S finds reliable. We attempt to continuously keep the 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 reservations for typing errors, calculation errors and assume no responsibility 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 a 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.
03-05-2017
Oil
68,63
68,60
68,60