Analysis Energy
Electricity price holds up despite record production
As expected, last week was a top week for the owners of solar panels. There was even a daily record. Despite the large supply, there has been no price dip. The oil price broke the psychological barrier of $70 a barrel this week. Will the optimism prevail in the oil market?
On Tuesday 1 June, production reached a record high with almost 80.000 MWh. That is approximately 25% of the electricity demand and 5% of the total Dutch energy demand. The sunny weather this week has not resulted in a price decrease in the electricity market. The oversupply on the electricity market was not too bad, mainly due to the relatively calm weather.
On Sunday May 30, the price dropped to €37,87 per MWh on the EXEP Spot. But a big dip on Sunday seems to be becoming standard. For the rest of the week, the electricity price remained stable at around €70 per MWh. Today (Friday 4 June) the price is €71,80 per MWh.
For the coming week, most experts do not expect any major price shifts. In the weather reports stable summer weather is also expected for next week. That means a wide range of solar energy during the day. If we look at the weather reports, the supply of wind energy is not great.
Boundary broken
The price of a barrel of Brent oil soared above $2 a barrel for the first time in 70 years this week. The pattern of recent weeks in which the price rose and always corrected just below USD 70 has thus been broken. Brent traded at $68,93 a barrel on Monday and has steadily climbed to $71,50 a barrel today (Friday, June 4).
The upward momentum has therefore not been broken this time, although there is also reason for it. For example, Iran's return to the international oil market is still in the air and OPEC+ announced this week that it would increase production by 450.000 barrels per day for July. According to analysts, the latter also says something about the influence of the monthly OPEC+ meetings on the oil market. But optimism about the economic recovery and the accelerated phasing out of corona restrictions continues to prevail.
Small movements in diesel price
The development of the diesel price this week differs from the developments in the crude oil market. Where the oil price went up in a fixed line, diesel goes up with small bumps. On Monday, the price stood at €104,15 per 100 liters and on Thursday it rose to €104,51 per 100 liters. Today (Friday 4 June) the price has dropped slightly again to €104,16 per 100 litres.
La-la-land scenario
The day before yesterday (Thurs. 3 June) Russian Deputy Prime Minister Alexander Novak and several other OPEC+ countries strongly criticized a report by the International Energy Agency (IEA). The agency states that in order not to emit CO2050 by 2, as laid down in the Paris climate agreement, the development of new oil and gas sources must be stopped immediately.
It is therefore not surprising that the oil-producing countries are extremely critical. If the world actually takes the controversial route of the IEA and immediately stops developing new fossil resources, "the price of oil will rise to $200 a barrel and the price of gas will skyrocket," Novak told an International Economic Congress. At the same meeting, the energy minister of Qatar, Saad Sherida Al Kaabi, even called the euphoria surrounding the transition to clean energy dangerous: "If you deprive companies of extra investments, you get big spikes in prices". of energy, Prince Abdulaziz bin Salman previously called the IEA plan a "la-la-land scenario" on Bloomberg.
A salient detail is that the IEA called on OPEC+ countries 2 weeks ago to increase oil production. "In the current OPEC+ production scenario, the supply does not rise sufficiently in line with the unexpected recovery in demand," according to the IEA. “The gap between supply and demand is paving the way for phasing out OPEC+ production restrictions.”
Jurphaas Lugtenburg
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