Analysis Energy
High demand and limited supply in the energy market
Energy prices rose across the board last week. Increasing demand is increasingly noticeable in the oil market. The electricity market is characterized by limited supply, despite an excellent week for solar panels.
The oil market has also managed to maintain the upward trend this week. Monday, June 7, Brent crude stood at $71,47 a barrel. More than $1 was added during the week and the working week closed on Friday, June 11 at around $72,55 a barrel.
Rising oil prices are mainly driven by increasing demand. The US Energy Information Administration announced that its refineries were operating at 91,3% of available capacity last week.
ramp up production
According to various players, good production figures and declining fuel stocks are the foundations in the oil market. The International Energy Agency (IEA) therefore called on OPEC+ again today (Friday 11 June) to further increase production for the second half of this year. Analysts expect the oil price to rise slightly further next week, provided there is no nuclear deal between the US and Iran.
The diesel price does not deviate from the trend in the oil market. On Friday 4 June, diesel still cost €104,16 per 100 liters. More than €1 has been added this week. On Friday 11 June, the diesel price will be €105,95 per 100 liters. Not only the more expensive crude oil plays a role, but there is also a good demand for diesel from logistics, among other things.
Concerns about environmentalism
The oil world is increasingly concerned about the influence of the environmental movement. For example, Shell was recently reprimanded in a lawsuit filed by Milieudefensie. Canada's TC Energy announced this week that it would abandon the construction of the Keystone XL pipeline in Alberta under pressure from environmental activists, among others.
And that while there remains a high demand for oil and gas in the medium term. There are still few electrical alternatives in the logistics sector and, according to analysts, gas-fired power stations are still needed for stability on the electricity grid. They expect energy prices to rise sharply due to lack of investment.
Trend break
There is a trend in the electricity market. There was still a dip on Sunday, but at €62,66 per MWh on the EPEX spot, it was much less deep than in recent weeks. Monday, June 7, the price rose to €77,36 per MWh and the market held on to that level for the rest of the week without any outliers. Today (Friday 11 June) the EPEX stands at €78,10 per MWh. Limited supply of wind energy and maintenance work on Dutch power plants resulted in relatively high electricity prices, despite the large supply of solar energy.
Yesterday's much-discussed partial solar eclipse (Thurs 10 June) has not caused any problems in the electricity market. The course of the cosmic phenomenon was well estimated in advance by grid operator TenneT, so that there was hardly any imbalance in the market. At the height of the eclipse, when 17% of the sun was covered by the moon, the hourly spot price rose by only 5% and 7% from the hourly price in the previous 2 hours.
Work on power plants will continue next week and will ensure a limited supply. The windless weather continues according to the weather reports and little cloud is expected for the next few days. The electricity price is therefore expected to remain the same next week or to rise slightly compared to this week.
Jurphaas Lugtenburg
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