MARKET INTELLIGENCE
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WEEKLY ENERGY MARKET REVIEW
Market Intelligence Group
WEEK 33, 2015
1
This document may not be reproduced or transmitted in
any form or by any means, electronic or mechanical, for
any purpose, without our prior written permission.
This report contains a range of theoretical curves, called “EMP structural prices”. The EMP structural prices are developed by EnergyMarketPrice analysts on the basis of a range of criteria pertinent for the respective markets. Specifically, oil EMP structural price takes into consideration US refinery capacity, crude runs, EIA crude stock levels and speculative positions in crude oil at NYMEX. Electricity EMP structural prices are constructed on the basis of oil, natural gas, uranium, coal, carbon emissions transposed to the national power parks (taking also into account nuclear outages, where relevant). These curves have as a sole aim to aid understanding the influence of different factors on real market prices. These curves should not be used for any commercial quotations. This report contains a range of flashes indicating the expected market trend for the short term. Upward flashes indicate that the market price is expected to increase. Downward flashes indicate that the market price is expected to decrease. Straight flashes indicate that the market price is expected to remain in the range in the short term. The expectations are based on EnergyMarketPrice analysts’ assessment, and there should be no liability on their part related to any risks taken on the basis of these assessments.
Note on EMP structural prices and market views
2
Power forwards
CO2
Coal
HIGHLIGHTS
Brent rose 0.9%, snapping a
string of six weekly losses, as the front-month September contract
approached expiration.
Distillates slipped as the
market remained well supplied.
Spot natural gas prices are
expected to rise as imports from Norway will decrease.
Coal fell to their lowest level in
almost a decade as China's devaluation of its currency
triggered economic concerns over the economy of the world's
biggest coal consumer
German power slightly
rebounded from the almost 12-year low hit last week.
The French Cal' 16 contract is much less liquid.
Evolution of main energy products in the last 30 days
WEEKLY MARKET REVIEW WEEK 33, 2015
Market Intelligence Group www.energymarketprice.com
Natural gas
Distillates
Oil
3
-0.5%
-1.4%
-2.3%
-3.8%
-1.3%
-2.7%
-0.6%
-3.0%
6.0%
-6.5%
-8.9%
-1.9%
-5.9%
-6.6%
-8.7%
-19.4%
-14.7%
-25.0% -20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0%
Iberian power 2016
Italian power 2016
Nordic power 2016
UK power next season
Dutch power 2016
Belgian power 2016
French power 2016
German power 2016
CO2 (EUAs)
European coal
Iberian gas
UK gas (NBP)
Dutch gas (TTF)
Belgian gas (Zee)
Gas oil
Heavy fuel oil
Brent oil
Evolution Forecast
Aug. 14 453.6
Aug. 7 455.3
Stock EIA
-0.36%
405060708090
100110
OIL
Brent rose 0.9%, snapping a
string of six weekly losses, as the front-month September contract
approached expiration. Brent prices are well above the 2015
low of $45.19 from January, despite its recent slide.
WTI crude fell to a fresh 6-1/2-year low on Friday, posting a
seventh weekly loss. U.S. refinery outages dampened demand and bulging inventories
amplified concerns about a global supply glut. Data showing
North Dakota crude oil production rose a second straight
month in June, along with the stronger dollar and weaker-than-
expected consumer sentiment were also bearish for WTI crude.
Money managers cut their net long U.S. crude futures and
options positions to the lowest level since 2010.
Brent Oil
($/barrel)
EIA Stocks
WEEKLY MARKET REVIEW WEEK 33, 2015
Weekly Evolution
Weekly Evolution
Market Intelligence Group www.energymarketprice.com
mln bbl
4
Evolution Forecast
Aug. 14 49.03
Aug. 7 48.61
Brent Oil ($/barrel)
+0.86%
200
250
300
350
400
450
500
Stock EIA crude range (2004-2014) Stock EIA 2015
OIL
Oil structural price is a
theoretical EMP modeled price based on US refinery capacity,
crude runs, EIA crude stock levels and speculative
positions in crude oil at NYMEX.
EMP structural price recovers slightly
($/barrel)
WEEKLY MARKET REVIEW WEEK 33, 2015
Market Intelligence Group www.energymarketprice.com 5
0
20
40
60
80
100
120
140
160
180
Oil EMP Structural price EMP Structural price+speculation
OIL
Top global oil producers
Global Oil Production per Country
WEEKLY MARKET REVIEW WEEK 33, 2015
Market Intelligence Group www.energymarketprice.com
Non-OPEC production OPEC production
as of July 2015
In million barrels per day
6
1.69
1.78
2.00
2.40
3.37
2.60
2.70
2.80
2.69
3.80
4.77
4.59
9.90
10.79
15.10
0 5 10 15 20
KazakhstanNorwayNigeria
VenezuelaBrazil
KuwaitUAEIran
MexicoIraq
CanadaChina
Saudi ArabiaRussia
U.S. (50 States)
OPEC, 37.19
Rest of the world,
58.44
OIL
Global Demand and Supply, Inventories
end of period inventories, in
million of barrels
Global Demand and Supply, Inventories
WEEKLY MARKET REVIEW WEEK 33, 2015
Market Intelligence Group www.energymarketprice.com
in mbpd
7
50
52
54
56
58
60
62
64
66
0
500
1000
1500
2000
2500
3000
3500
U.S. Commercial Inventory OECD Commercial Inventory U.S. Forward Days Cover OECD Forward Days Cover
0.92
0.94
0.96
0.98
1
1.02
1.04
75
80
85
90
95
100
Demand Supply Supply/Demand
Evolution Forecast
Aug. 14 233
Aug. 7 243.5
HFO 3.5% ARA ($/ton)
-4.31%
DISTILLATES
Distillate prices rose in line with Brent oil.
Diesel barge differentials in northwest Europe slipped slightly
as the market remained well supplied, with high inventories
and more cargoes on the way from the U.S. Gulf Coast, the
Middle East and Russia. Refineries have been running hard to meet the demand for
gasoline but this has also boosted diesel stocks.
Product is also being kept in ARA because of low water levels along
the Rhine and Danube, which means that barges are restricted
to loading less than 50% of capacity.
Evolution of Gasoil in the last 30 days
Evolution of Heavy Fuel in the last 30 days
WEEKLY MARKET REVIEW WEEK 33, 2015
Weekly Evolution
Weekly Evolution
Market Intelligence Group www.energymarketprice.com
$/ton
8
450
480
510
540Gasoil
Evolution Forecast
Aug. 14 474.5
Aug. 7 467.5+1.49%
Gasoil ($/ton)
230
250
270
290
310Heavy Fuel Oil
$/ton
500
1500
2500
3500
4500Stock ARA Gasoil range (2004-2014) Stock ARA GOL 2015
DISTILLATES
HFO and Gasoil stocks above long-term
range
ARA stocks are volumes independently held in the
Amsterdam-Rotterdam-Antwerp hub
ARA gasoil stocks rose 5.8% last week, reaching a
new record high of 3.46 million tonnes.
ARA Gasoline stock levels are
also above the long term range.
(In kiloton)
WEEKLY MARKET REVIEW WEEK 33, 2015
Market Intelligence Group www.energymarketprice.com
(In kiloton)
(In kiloton)
9
0
500
1000
1500Stock ARA Heavy Fuel Oil range (2004-2014) Stock ARA HFO 2015
200400600800
100012001400
Stock ARA Gasoline range (2004-2014) Stock ARA Gasoline 2015
NATURAL GAS
Futures fell in most
European markets. Falling oil prices mean that oil-
indexed gas deliveries from Russia will get cheaper this
winter, raising expectations of continued high deliveries into
European gas markets.
Prompt prices are expected
to rise as imports from Norway will decrease due to planned
maintenance at Kollsnes processing plant, which treats
gas from the country’s largest gas field Troll. Demand in UK was
around 20% above the seasonal norm, largely due to high
demand from power plants. Asian LNG prices steadied for
September delivery as traders awaited the outcome of
purchase and supply tenders to signal price direction.
Evolution of Natural Gas Futures
(In EUR/MWh)
Evolution of Natural Gas Day-Ahead Market
WEEKLY MARKET REVIEW WEEK 33, 2015
Market Intelligence Group www.energymarketprice.com
(In EUR/MWh)
Weekly Evolution
Weekly Evolution
(In EUR/MWh)
(In EUR/MWh)
10
19.019.520.020.521.021.522.022.523.0
Gas ZEE Cal+1 Gas TTF Cal+1 Gas NBP Cal+1 Gas GASPOOL Cal+1 Gas SPA Cal+1
19.0
19.5
20.0
20.5
21.0
21.5
22.0
Gas ZEE DA Gas TTF DA Gas NBP DA Gas GASPOOL DA Gas PEG DA
Aug.
14 Aug. 7 Change Forecast
20.3 20.4 -0.44%
20.1 20.2 -0.74%
22.3 22.3 -0.25%
19.5 19.9 -1.71%
20.1 20.8 -3.79%
Gas TTF 2016
Gas NBP 2016
Gas GASPOOL 2016
Gas ZEE 2016
Gas SPAIN 2016
Last
week avg
Prev.
week avg Change
19.5 20.1 -3.01%
19.8 20.3 -2.31%
19.6 20.3 -3.61%
20.1 20.7 -3%
19.8 20.2 -2.39%
Gas ZEE DA
Gas TTF DA
Gas NBP DA
Gas GASPOOL DA
Gas PEG DA
NATURAL GAS
Natural Gas Oil Linked Price Components
303 – average daily prices of the period Q-1 applied to calculate the
price for the period Q
313 – average daily prices of the months M-2 to M-4 applied to
calculate the price for the period Q
603 – average daily prices of the months Q-1 and Q-2, applied to
calculate the price for the period Q
703 – average daily prices of the months M-1 to M-7, applied to
calculate the price for the period Q
101 - average daily prices of the month M-1 applied to calculate
the price for the period M
Q – quarter, M – month.
(In EUR/bbl)
WEEKLY MARKET REVIEW WEEK 33, 2015
Market Intelligence Group www.energymarketprice.com
(In EUR/ton)
(In EUR/ton)
Weekly Evolution Evolution of Brent components for gas prices in the last 30 days
Evolution of Gasoil components for gas prices in the last 30 days
Evolution of HFO components for gas prices in the last 30 days
11
46485052545658 Brent303 2014
Brent313 2014Brent603 2014Brent703 2014Brent101 2014
420435450465480495510525 GOL303 2014
GOL313 2014
GOL603 2014
GOL703 2014
GOL101 2014
230240250260270280290 LFO303 2014
LFO313 2014
LFO603 2014
LFO703 2014
LFO101 2014
Aug. 14 Aug. 7 Change Forecast
47.90 48.34 -0.9%
47.35 47.76 -0.87%
48.00 48.45 -0.92%
48.05 48.50 -0.92%
49.03 49.44 -0.84%
Brent303 2016
Brent313 2016
Brent603 2016
Brent703 2016
Brent101 2016
Aug. 14 Aug. 7 Change Forecast
447.11 451.07 -0.87%
443.83 447.45 -0.8%
444.74 448.57 -0.85%
445.93 449.70 -0.83%
453.71 458.31 -1%
GOL313 2016
GOL603 2016
GOL703 2016
GOL101 2016
GOL303 2016
Aug. 14 Aug. 7 Change Forecast
234.98 238.33 -1.4%
232.15 235.93 -1.6%
232.70 236.53 -1.61%
233.82 237.76 -1.65%
240.62 243.19 -1.05%
LFO303 2016
LFO313 2016
LFO603 2016
LFO703 2016
LFO101 2016
0
1
2
3
4
5
6
7
8
9
10
18
20
22
24
26
28
30
32
34
36
TTF gas Cal Y+1 Oil linked gas price Cal Y+1 Premium [Oil linked gas] - [ZEE TTF average]
NATURAL GAS
Oil linked natural gas premium down from 7 EUR/MWh in April
to under 3 EUR/MWh
Oil linked natural gas price
(EUR/MWh)
WEEKLY MARKET REVIEW WEEK 33, 2015
Market Intelligence Group www.energymarketprice.com 12
Evolution Forecast
Aug. 14 22.57
Aug. 7 22.74
Oil linked gas price Cal+Y1
-0.77%
NATURAL GAS
Gas storage in
Europe rose 2.7 points for the
week, reaching 65.9%.
Gas storage in Europe
WEEKLY MARKET REVIEW WEEK 33, 2015
Market Intelligence Group www.energymarketprice.com
Weekly Evolution
NBP
AUT
GER
FRA
BEL
NED
PSV
IBR
In billion cubic meters
Latest data
13
Aug.
14 Aug. 7 Change
53% 51% 2.42
62% 59% 2.54
65% 64% 1.46
76% 72% 3.33
67% 63% 3.74
81% 78% 2.68
82% 78% 3.09
37% 34% 2.5
PSV
THE NETHERLANDS
BELGIUM
AUSTRIA
GERMANY
IBERIAN
NBP
FRANCE
0.3
1.6
3.6
3.8
6.0
11.5
7.8
11.9
0.4
0.4
1.2
2.1
2.9
2.8
6.9
7.4
0 4 8 12 16 20
Belgium
The Netherlands
NBP
Iberian
France
Italy
Austria
Germany
Full capacity
Empty capacity
Evolution Forecast
Aug. 14 8.15
Aug. 7 7.79
CO2
+4.62%
COAL & CO2
Coal futures fell to their lowest
level in almost a decade as China's devaluation of its currency triggered
economic concerns over the economy of the world's biggest coal consumer. European API2 2016 coal
futures settled at their lowest level since November 2005, and
benchmark Chinese coal futures were also near record lows, last
settling at $51.10 a tonne. The price falls came as China's yuan hit
four-year lows, after authorities devalued the yuan in a move that
raised fears of a global currency war.
EU carbon prices rose 4.6% last
week. Germany sold 1.599 million spot EU carbon permits on EEX
at 8.15 EUR/t on August 14. Previously, EU countries sold
1.459 million carbon permits at 8.2 EUR/t on August 13.
Evolution of Coal Futures in the last 30 days
(In USD/ton)
Evolution of EU carbon prices in the last 30 days
WEEKLY MARKET REVIEW WEEK 33, 2015
Market Intelligence Group www.energymarketprice.com
(In EUR/ton)
Weekly Evolution
Weekly Evolution
14
53
54
55
56
57
58
59
Coal Cal+1, API N2, 6000 kCal NAR CIF, USD/tonne
Evolution Forecast
Aug. 14 53.95
Aug. 7 54.55
Coal Cal+1, API N2
-1.09%
7.2
7.4
7.6
7.8
8.0
8.2
8.4
CO2, in EUR/tonne
FREIGHT Aug. 14 Aug. 7 Change
RICHARD BAY -
ROTTERDAM 4.05 3.95 0.1
RICHARD BAY -
MEDITERRANEA
N
11.75 11.75 0
QUEENSLAND -
ROTTERDAM 7.65 7.8 -0.15
PUERTO BOLIVAR
- ROTTERDAM 4.85 4.8 0.05
MARACAIBO -
ROTTERDAM 13.49 12.4 1.09
HR - ROTTERDAM 5.45 5.5 -0.05
US GULF OF
MEXICO - ARA 9.5 9.8 -0.3
COAL
Chinese demand for overseas shipments has
already been waning as its
economy grows at its slowest pace in decades and
the government tries to reign in on rampant
pollution, to which coal
contributes heavily. The country's coal imports
over the first half of the year were down 37.5% over
the same period last year.
Global physical coal trade, futures and freight
WEEKLY MARKET REVIEW WEEK 33, 2015
Market Intelligence Group www.energymarketprice.com
Weekly Evolution
(In USD/ton)
1
2 3
4
5
6
7
8
9
1
2
3
4
9
8 6
7
5
10
10
Physical trade
Futures
Forward Coal Trends
15
52
54
56
58
60
EEX Month Ahead Richards Bay Month Ahead
10.6549.851.954.156.1
59.256.356.356.42
62.0061.10
68.0574.00
70.6067.80
0 50
US Western Month AheadColombia
Russia BalticMaputo South Africa
Richard Bay South AfricaNewcastle Australia
Richards Bay Month AheadRotterdam Month Ahead
EEX Month AheadVenezuela
Russia EasternKalimantan Indonesia
PolandChina
Newcastle Australia - Japan
ELECTRICITY
Power prices for delivery
next year rose 0.8% in Germany and 0.3% in the Netherlands,
but fell 0.9% in France and 0.3% in Belgium and UK. German
Cal16 slightly rebounded from the almost 12-year low hit last
week. The French Cal' 16 contract is much less liquid.
Spot power prices rose
at the end of last week, as a sharp drop in supplies of
German renewable energy offset lower electricity demand brought on by cooler weather.
However, the picture turns bearish as temperatures are
expected to drop significantly, reducing the need for air-
conditioning. On the supply side, five French nuclear reactors,
representing 6,200 MW of capacity, were expected to restart over the weekend.
Electricity forward prices across Europe
(EUR/MWh)
WEEKLY MARKET REVIEW WEEK 33, 2015
Market Intelligence Group www.energymarketprice.com
Evolution
16
20
25
30
35
40
45
50
55
60
65
70
Belgium Netherlands Germany France
Great Britain Nordic Pool Spain Italy
Last
quotation
Cal+1 bsld
Last 20
days
average Change
UK 62.69 63.29 -0.60%
Belgium 45.80 46.00 -0.20%
Italy 48.20 48.48 -0.28%
Spain 47.90 47.95 -0.05%
Hungary 40.50 40.55 -0.05%
Netherlands 38.25 38.16 0.09%
France 39.40 39.62 -0.22%
Germany 31.15 31.33 -0.18%
Austria 31.15 31.33 -0.18%
Czech Rep. 30.80 31.10 -0.30%
Nordic 25.65 25.52 0.13%
ELECTRICITY
Historical range Electricity forward prices
(EUR/MWh)
WEEKLY MARKET REVIEW WEEK 33, 2015
Market Intelligence Group www.energymarketprice.com
Evolution of electricity forward prices for delivery
next year since 2007
17
30
40
50
60
70
80
90
100
110
120
Belgium Netherlands Germany France Spain UK
ELECTRICITY
Spreads represent the
theoretical net income of a power plant from selling a
unit of electricity, after buying the fuel required to
produce this unit.
Spark spread = natural gas.
Dark spread = coal.
Clean spreads = required number of carbon
allowances also deducted.
WEEKLY MARKET REVIEW WEEK 33, 2015
Market Intelligence Group www.energymarketprice.com
Power premiums Spark Spreads
Clean Spark Spreads
Dark Spreads
Dark Clean Spreads
18
-15
-10
-5
0
5
10
German spark spread 2016French spark spread 2016Belgian spark spread 2016
Aug. 14 Aug. 7 Change
DE/FR -20.94% -22.26% +1.32%
BE/FR 16.24% 15.55% +0.69%
BE/NL 19.74% 20.39% -0.65%
DE/NL -18.56% -19.00% +0.44%
DE/BE -31.99% -32.72% +0.73%
12
17
22
27
32
German dark spread 2016French dark spread 2016Belgian dark spread 2016
-20
-15
-10
-5
0
5
German clean spark spread 2016French clean spark spread 2016Belgian clean spark spread 2016
5
10
15
20
25
German clean dark spread 2016French coal spread 2016Belgian coal spread 2016
FOCUS WEEKLY MARKET REVIEW WEEK 33, 2015
Market Intelligence Group www.energymarketprice.com
Global coal price benchmarks facing
overhaul
19
The global thermal coal industry is facing the biggest shake up of its pricing benchmarks after Argus and IHS McCloskey, the dominant price providers, proposed changes to their assessments.
The world's top three coal indices, which help inform short and long-term deals struck between coal producers,
traders and end-users, are all under review.
Earlier this year, price spikes in South Africa's Richard's Bay and Australia's Newcastle markets caused concern that prices could be higher than fundamentals justified. Traders said at the time there had been some high bids placed at short notice which few sellers could meet.
As the market is not particularly liquid, bids and offers help inform pricing on the indices.
In response to the concerns, consultations have drawn feedback on proposed changes to the API 2 benchmark for northern European coal markets and the API 4 South
African coal benchmark, the worlds' first and third largest coal indices.
The indices are calculated using data gathered by Argus and IHS McCloskey.
The consultations by Argus and IHS McCloskey, which ended last week, proposed narrowing the window for price assessments which provide the basis for the API indexes from around three months to around two months from Sept. 1.
Both Argus and IHS McCloskey said they were reviewing responses to their proposals.
"We've identified that there could be ways to look at the assessment window and amend the methodology that will help
with liquidity, so we have gone down the path of this consultation," said John Howland, senior director of coal at IHS Energy, which owns IHS McCloskey.
A spokeswoman for Argus said: "In our discussions with the industry, questions and suggestions had come up around changing the date range specification of some of our coal assessments.“
Trading platform globalCOAL is also discussing narrowing the three-month timeframe used for prices on its Newcastle benchmark index with market members, although it has not launched a formal consultation, said Chief Executive Eoghan Cunningham.
Source: Reuters
ECONOMICS
European stocks
had their worst week in six, falling 2.9 %, as shares of
exporting companies with exposure to China fell after the
yuan was devalued. Economic growth in the euro
zone slowed in the second quarter as France stagnated
and Italy lost momentum, held back by an uncertain global
outlook that is weakening investment even in
powerhouse Germany.
U.S. stock indexes ended higher on the week, however, mostly on the strength of big
gains on Monday.
Evolution of Dow Jones Industrial Average Index
Evolution of FTSEurofirst 300 Index
WEEKLY MARKET REVIEW WEEK 33, 2015
Market Intelligence Group www.energymarketprice.com
Weekly Evolution
Weekly Evolution
20
17200
17400
17600
17800
18000
18200
Dow Jones Industrial Average Index
Evolution Forecast
Aug. 14 17477.4
Aug. 7 17373.4
Dow Jones
+0.59%
1450
1500
1550
1600
1650
FTSEurofirst 300 Index
Evolution Forecast
Aug. 14 1528.15
Aug. 7 1574.37
FTSEurofirst 300
Index
-2.93%
RATES
Exchange Rates
The dollar came under pressure last week as
China's devaluation curbed expectations the
Federal Reserve's long-awaited interest rate
increase would come as early as its Sept. 16-17
meeting. But strong U.S. retail sales
data and good industrial production data backed
the view that the Fed was ready to hike.
WEEKLY MARKET REVIEW WEEK 33, 2015
Market Intelligence Group www.energymarketprice.com
Weekly Evolution EUR/USD
GBP/USD
GBP/EUR
EUR/NOK
21
1.06
1.07
1.08
1.09
1.10
1.11
1.12
EUR/USD
1.371.381.391.401.411.421.431.441.45
GBP/EUR
1.54
1.55
1.55
1.56
1.56
1.57
1.57
GBP/USD
8.7
8.8
8.9
9.0
9.1
9.2
EUR/NOK
Aug. 14 Aug. 7 Change
EUR/USD 1.1107 1.0972 +1.23%
GBP/USD 1.5648 1.5498 +0.96%
GBP/EUR 1.4088 1.4125 -0.25%
EUR/NOK 9.1375 9.0410 +1.06%
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