Morning Report May 10, 2017
SECURITIES
Expectation
Oil
On the international crude oil market, Tuesday initially opened with a downside, but the negative sentiment returned later in the session.
Despite intentions from OPEC to limit the global oversupply through a production cut, this has not been successful as production in the
US has instead increased significantly. Furthermore, a strengthening US dollar added to the negative sentiment. Even though OPEC are
expected to prolong their productions cuts when they meet later this month, there are no signals that the market is about to face any
upside as a result of this.
Gas
Gas prices on the continent saw another downside Tuesday, although they were more limited than during the previous sessions. The
market has focus on the largest gas field in the Netherlands, the Groningen field, where output will be curbed further to avoid earthquakes. This is however not enough to cause an upside on the market, since weak demand and an ample supply due to LNG flows from
the Middle East weigh heaver. A minor rebound does however seem likely Wednesday.
Coal
European coal prices dropped to a six-week low in Tuesday’s trading, as a continuous oversupply impacts the market. The API 2 Cal-18
contract fell 0,20 USD/t, closing at 63,65 USD/t. Demand remains week in Europe, and the negative influence from the related oil and
gas markets adds to the bearish sentiment. We expect a slight upside Wednesday, but merely as a correction, not because fundamentals have changed.
Carbon
The European carbon emission market is trading quite range bound at the moment, with prices changing direction almost every day and
staying within a narrow price area. Yesterday, the market won back the losses from Monday as clean dark spreads are improving due
to the downside on the coal market. As a result, the benchmark quota contract closed the day at 4,52 EUR/t, up 0,10 EUR/t against the
previous close.
Hydro
There are currently some very insecure weather forecasts for the long end of the curve. The next week or so looks relatively normal in
terms of precipitation, but from the beginning of next week, some models predict significant amounts of rain, while others have a much
drier outlook. The hydro balance is in a deficit of 5,8 TWh currently, while temperatures remain well below normal.
Germany
On the German power market, the steady decline continued yesterday and the market has now fallen for quite a long time. The Cal-18
contract closed at 28,85 EUR/MWh, down 0,05 EUR/MWh from Monday. Falling coal prices are the main reason behind the downside,
and had it not been for temperatures well below average, the losses would most likely have been even bigger.
Equities
Tuesday saw a minor upside on the European stock markets, while the American markets were marginally negative due to the falling
oil prices. We could see a bearish sentiment on the European markets again Wednesday, on a day with no big events expected to take
place on the market.
Conclusion
Tuesday, the range-bound trading and the limited fluctuations continued on the Nordic power market. The losses on the coal and gas
markets caused the YR-18 contract to fall 0,10 EUR/MWh, closing at 23,00 EUR/MWh. The Q3-17 contract was up a marginal 0,02 EUR/
MWh, settling the day at 23,67 EUR/MWh. We could see a slight upside this morning, but we do not expect the gains to be more than a
few cent as the market seems very reluctant to make big fluctuations at the moment.
Spot
DK1
DK2
SE3
SE4
HEL
OSL
SYS
Forwards
DK1
DK2
STO
MAL
HEL
OSL
SYS
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
10-maj
38,14
38,14
36,84
36,84
36,84
35,14
SRMC
Coal
Gas
Oil
30,09
June
25,30
25,97
23,42
24,17
26,17
23,92
34,75
Q3-17
27,68
28,93
26,70
27,23
29,70
24,05
23,67
June
32,33
28,17
68,63
23,95
Q3-17
31,87
29,09
36,33
2017
24,60
26,48
24,80
25,10
28,28
22,64
67,50
23,00
2018
29,28
31,72
67,50
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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