Most energy commodities strengthened week-on-week on the back of the minor gains in oil and the rising equities. Despite the positive tone in global stock indices, oil prices only gained a meagre 0.8% last week on the back of a weaker dollar and mixed indications from the US inventories data. Coal prices also moved up marginally, driven by the stronger energy complex and higher freight rates. Carbon prices returned to track the key energy contracts and closed 1.5% higher, after spending the past two weeks racking over the uncertainties of an industrial length due an EU court ruling. North European gas prices were fairly volatile last week, driven by the variation in consumption and supplies. Strong flows through the IUK exports helped eased the continental demand whilst balancing the length in the UK system. Gas forward contracts ticked up echoing gains in the prompt and oil market. Spot power prices were bullish last week on reduced wind and nuclear availability, while forward contracts also moved up amid tightness in the short-term market and positive sentiment from the primary fuels.
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The energy complex rose higher last week supported by the strong optimism in the US oil market bolstering the demand outlook of most energy commodities. Oil prices gained 6.7% to close at $69.2/bbl amid the strength in global equities, a weaker dollar and the falling gasoline stocks. Coal prices took direction from oil and also some positive indication from the strong Chinese interest in Richards Bay coal and a drop in Indian stockpile, to push prices 3.9% higher. Carbon prices also ticked up by 2.9% on expectations that some member states would not be allocated with large amounts of additional allowance. Gas prices had some early gains but plunged significantly in the run up to the new gas year on abundance of supplies and weak demand indications from the continent. Spot power prices were very volatile last week led by the variability in wind and thermal capacities in France and Germany, while forward contracts were only marginally higher.
The energy complex slid further last week as bearish sentiment from oil filtered through to weigh on most commodities. Brent crude oil was the biggest loser, down by 9.4% week-on-week as softening in global equities and weak inventories data published by EIA combined to push prices down. However, coal prices were somewhat more resilient, as bearishness from oil and equity markets were partially offset with an increase in activity in the Pacific basin. Carbon prices also lost ground, closing on Thursday at €12.8/t as prices took direction from the gloomy sentiment from the wider energy complex and a decision made by a court that could lead to an increase in supply of allowances. NBP prices plunged to a 3-year low, whilst TTF remained broadly steady at the start of last week, before both prices realigned again following the return of the IUK pipeline on Wednesday. The entire gas curve hit a fresh 90-day low as improved supply optimism and bearish oil combined to pressure contracts down. Spot power prices climbed above €45/MWh last week on lower temperature and reduced wind and hydro production, whilst forward contracts echoed the softening in the wider energy complex.
The energy complex, with the exception of Carbon, only recorded minor changes last week as gains in the oil market failed to bolster prices of other commodities. Oil prices gained more than 2% last week on a combination of upbeat macro-economic data, rising equities, a weak dollar and another large drop in US crude inventories. This bullish sentiment from oil filtered through to lift coal prices by a meagre 0.4%, amid the recovery in Australian coal prices and little changes in fundamentals in the Atlantic basin. Carbon prices were the biggest loser last week, plunging by more than 9% as market reacted to the bleak price forecast published by Barclays Capital along with very little buying activity from utilities. Prompt gas prices in the UK and the continent continued to diverge in the absence of the IUK pipeline, while forward gas prices softened slightly. Prompt power prices hovered between €35/MWh and €43/MWh over the week tracking the variability in wind production. Forward power contracts retreated modestly echoing the massive losses in the carbon market.
Most energy commodities recorded small price movements last week, amid little changes in fundamentals. Oil prices recovered some of the losses registered in the preceding week on a combination of bullish equity markets, a weaker dollar and an upwards revision in IEA’s demand forecast. This bullishness in oil markets and the dwindling US currency also pushed coal prices slightly upwards, despite rather depressed fundamentals in the Atlantic and Pacific basins. European carbon prices softened slightly as a result of low buying interest from utilities and financials. Prompt gas prices in the UK and the Continent diverged considerably due to maintenance in the Interconnector pipeline, while forward prices in both markets remained almost unchanged. Prompt power prices were supported by low wind production and an unexpected outage at a major German nuclear plant, but forward prices eased off slightly, in line with carbon prices.
