Analysis Energy
Fluctuating signals on the energy market
Electricity continues to be expensive during the week, although there was a big difference between weekdays and the weekend. The oil market is also characterized by volatility. OPEC+ and the EIA are sending out rather mixed signals here.
Last weekend there was a significant dip in the price, with €65,86 per MWh on Saturday 17 July on the EPEX spot listing. On Sunday, the price dropped further to €47,90 per MWh, the lowest level in a month and a half. On Monday 19 July, the price climbed to €92,27 per MWh. For the rest of the week, the price continued to hover around €90 per MWh.
A smaller price drop is expected for the coming weekend. Showers and gusts of wind are likely to cause an imbalance in the electricity grid with prices likely to be higher than last weekend. The outlook for the remainder of the week is uncertain. TenneT has completed part of the maintenance work, but on the other hand, the supply of solar energy will probably be slightly lower. A sharp drop in electricity prices therefore does not seem likely.
Future vision
On 1 January 2022, grid operator Tennet will present the investment plans up to and including 2031 to the energy market regulator, the Netherlands Authority for Consumers and Markets (ACM) and the Minister of Economic Affairs and Climate (EZK). In anticipation of this, TenneT has already published 19 future scenarios on Monday 3 July.
What is striking is that in all scenarios it is assumed that no more coal will be fired by 2030. The number of gas-fired power stations is also decreasing. On the other hand, hydrogen will be introduced as a new fuel. In all scenarios, TenneT expects the nuclear power plant in Borssele to remain in operation at least until 2033. In addition, the supply of solar and wind power will increase considerably, according to the grid operator.
Major fluctuations in the oil market
The oil market has been in flux over the past week. Monday, July 19, the day started with a price of $73,18 for a barrel of Brent crude to end at $68,83 a barrel at the end of the day. On Tuesday, the price dropped a little further at USD 0,20 before climbing to USD 73,55 a barrel in the second half of the week (Friday, July 23).
The cause of the significant price fluctuations is due to various signals on the market. OPEC caused unrest due to the breakdown of the negotiations on 1 July. That was already smoothed out last week and last Sunday (July 18) also approved by the + countries, especially its important partner Russia. The cartel has agreed to increase oil production by 400.000 barrels per day from August and will continue to do so until an additional 5,8 million barrels per day are pumped in September 2022, bringing production back to pre-spring 2020 levels. the corona crisis erupted in full force. But the turmoil within OPEC+ has certainly not helped confidence in the organisation's decisiveness.
Open to multiple readings
The Energy Information Administration (EIA) reported rising crude oil inventories earlier this week. This would normally result in a price drop. At the moment this effect is only very limited, because the EIA also notes that the stocks of petrol and diesel are decreasing. Analysts interpret the EIA's report very differently. One sees demand for oil increasing as fuel supplies dwindle, while the other argues that refineries are not running at full capacity because oil companies don't expect demand to pick up much in the near future.
The diesel price followed the oil price with a day's delay. On Tuesday 20 July, the price dropped to €105,71 per 100 litres. That has now risen again to €107,88 per 100 liters, today (Friday 23 July).
Jurphaas Lugtenburg
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