Analysis Energy
Oil becomes more expensive, electricity a market of extremes
Relatively low crude oil inventories in the United States and optimism about economic recovery are pushing up the oil price further. The electricity market is currently one of extremes, in which the price halves one day and doubles the next. Does Tide Power Provide More Stability?
The oil price is gradually rising again. After a short dip - when one barrel of Brent oil was trading at $20 on July 68,63 - the price closed on Monday July 26 at $74,84 a barrel. On Tuesday, July 27, the price dropped to $74,61, before climbing steadily to $75,96 a barrel on Friday, July 30.
Small stock and falling dollar
The rise in the oil price appears to be a delayed reaction to the relatively sharp decline in oil reserves in the United States. Due to the depreciation of the dollar, oil is also attracting additional attention from investors and speculators. Add to that the expected economic recovery and further price increases are expected.
Yet that is not the whole story. First of all, there are concerns about the delta variant of the coronavirus and its possible adverse consequences for the economy. The greening agendas of the European Union and the United States also have a negative impact on demand. It is also causing unrest within OPEC+. The cartel does not want to flood the market with oil, causing the price to fall, but individual countries would like to use their maximum capacity before oil is less demanded. That was more or less the cause of the conflict within OPEC earlier this month.
All this results in the market reacting quite nervously to (bad) news. Or as one analyst puts it: "The price takes the elevator down for a correction to climb the stairs again."
Diesel remains stable
There is not much movement in the diesel price. On Monday, July 26, the price stood at €108,46 per 100 litres. After some pluses and minuses, the price today stands at €108,78 per 100 litres. The diesel price has been moving between €105 per liter and €110 per 100 liters for two months. According to most analysts, that will not change. Diesel prices are expected to move further towards the top of the range.
Market of extremes
The electricity market has been characterized by extremes in the past week (since a number of relatively stable weeks). After the dip in which the EPEX Spot index stood at €63,54 per MWh, it rose to €26 per MWh on Monday 91,16 July. On Thursday 29 July, the price was halved to €45,48 per MWh. That is the lowest level in two months. This price drop was mainly caused by the combination of strong winds and a lot of sun, which resulted in a considerable oversupply of electricity. On Friday 30 July, the electricity price rose again to €95,49 per MWh.
No fixed weather is forecast for next week. Showers will probably limit the supply of electricity from the sun. At the same time, the messages are also expected to decrease. That doesn't mean the price will go up. According to analysts, demand for electricity is temporarily declining. After the North region, the construction industry will also start in the Central region, during a period in which several factories are standing still. A sharp fall in the electricity price is not expected by most analysts, but slightly less high peaks, especially in the hourly prices, are quite conceivable.
Tidal current for stable network
The transition between ebb and flow has been seen as an energy source for decades. Yet few large projects that work on the basis of tides have been realized. This week the Orbital Marine Power one of the first 'large' tidal turbines was commissioned. According to the company, the O2 turbine has a capacity of two megawatts of electricity, sufficient for the consumption of approximately 2.000 homes.
The turbine is a kind of inverted windmill, with two blades with a diameter of twenty meters under water. Ebb and flow ensures the flow of water along the blades. In contrast to the weather, tides are very predictable. As a result, it is possible to accurately calculate the yield per day from hour to hour. This means that this source of energy can contribute to stability on the electricity grid. The O2 turbine is located off the coast of Scotland's Orkney Peninsula.
Jurphaas Lugtenburg
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