Analysis Energy
Oil price falls due to corona, electricity price peaks
The oil market is a bit down at the moment. Concerns about the coronavirus in China and growing crude oil inventories in the United States are putting pressure on prices. The electricity price, on the other hand, reached its highest level in nearly a decade.
The electricity market moved a lot last week. It is striking that the price on the 'EPEX Spot' quotation reached its lowest point on Saturday (and not on Sunday), at €48,40 per MWh. On Wednesday, August 4, the electricity price reached its highest level in almost ten years at €98,67 per MWh. In the meantime, the price has fallen again and on Friday 6 August it came out at €69,06 per MWh.
For the coming days, there seems to be little change in the large fluctuations in the electricity supply. Due to the weather forecasts and rain of the past period, only limited solar energy is generated. Only in the second half of the week does it seem to become firmer and sunnier and we can expect some more electricity supply. The Cobra cable to Denmark will also be operational again by then, which will facilitate the import of (cheap) power.
Small number of major polluters
Research from the University of Colorado shows that a small number of extremely polluting power plants account for a large part of CO2 emissions. The researchers have put together a model comparing the electricity production and CO2 emissions of nearly 30.000 power plants from 221 countries.
Coal and lignite power stations are - according to the researchers - the most inefficient and therefore the most polluting. Of the ten most polluting plants, six are in East Asia, two in India and two in Europe. The most polluting power station in the world is the Belchatow power station in Poland. By specifically adapting the most polluting power stations, CO2 emissions can be reduced relatively easily by 17% to 49%.
Oil is in a dip
The oil price has fallen sharply last week. One barrel of Brent oil cost $30 on Friday, July 76,33. In a few days, $6 has gone down there, bringing the price to $4 on Wednesday, August 70,22. The price is rising again and that brought the price of a barrel of Brent oil to a level of $72,13 on Friday, August 6.
The Delta variant of the corona virus left a strong mark on the oil market last week. China reports new corona cases and in almost two weeks the corona virus has been diagnosed in almost half of the provinces. Beijing subsequently decided not to allow train passengers from 23 regions and the government has urged residents of 46 cities not to travel; unless absolutely necessary. The Chinese government also published disappointing growth figures for the manufacturing industry.
Production and stock growing
In the United States, fuel inventories fell below the five-year average last week as demand nearly recovered. The refineries do have larger stocks of crude oil due to disappointing exports. Meanwhile, OPEC+ continues to ramp up production. Reuters reported that 610.000 barrels per day more were pumped by the cartel in July than in June. From August, the aim is to add another 2022 barrels every month (until April 400.000). OPEC+ does, however, express confidence in a speedy recovery of the global economy.
Fortunately, the relatively small American fuel stocks have no effect on the Dutch diesel market. Monday, August 2, diesel cost €109,09 per 100 litres. That has dropped by almost €2 in the past to €107,19 per 100 liters.
Jurphaas Lugtenburg
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