Analysis Energy
Oil market is recovering and electricity remains expensive
The electricity price remains at a stable high level. It also appears that the ambitions for making the electricity supply more sustainable are only partly being achieved. And the recovery in the oil market is noticeable after the sharp blow that the listing suffered last week.
The electricity market was remarkably flat. On the EPEX Spot, the quote only dropped to €22 per MWh on August 79,35, which is quite a high price for a Sunday. Electricity did not become cheaper in the following days and remained constant between €90 and €100 per MWh.
Analysts do not expect a major shift in electricity prices for the coming week. In any case, showers are forecast for the coming days, which will not benefit the yields of solar panels. Power consumption is expected to increase once school holidays are over in most of the country.
Power is just as in demand as before corona
Global demand for electricity is again above the level it was before the outbreak of the corona crisis. Many government leaders called for society to use the disruptive effects of the virus as a reason to emerge better and stronger from the crisis. In the field of energy, however, little has come of the grand ambitions of more than a year ago.
Compared to the first half of 2019, electricity consumption increased by 6% in the first 2021 months of 5, according to data from the European climate think tank Ember. A large part of that increase, namely 57%, was realized with extra wind turbines and solar panels. The remainder is accounted for by coal-fired power stations. Countries in Asia in particular have put a lot of new coal-fired power stations into operation.
Oil creeps up again
The oil market has recovered nicely from the blows it took last week. A range of factors caused a barrel of Brent crude oil to close last Friday, August 20, at $65 a barrel, its lowest price in 3 months. Monday, August 23, the price rose again to $68,66 per barrel and today (Friday, August 27) the price is already well above the $72,29 mark at $70.
The oil market is quite tense and reacts strongly to both good and bad news. Concerns about, for example, new corona measures due to the Delta variant or reports about increasing demand for oil or disappointing economic growth expectations, fluctuate and are decisive for the sentiment in the market for a few days. However, the trendline is pointing downwards in most technical analysis. The decline last week was just too fast.
What will OPEC+ do?
The OPEC+ meeting scheduled for next week may shed some light on where the cartel is headed. Earlier this month, the White House called for an increase in oil production. OPEC members are generally not inclined to give in to pressure from the United States. On the other hand, there are quite a few members who feel that the current production quotas they have been allocated are too low and in a sense go along with the US reasoning.
The diesel price rose, just like the oil price. From €104,79 per 100 liters at the end of last week to €107,71 per 100 liters today (Friday 27 August). A sharp drop in diesel prices is not expected in the coming week. The demand for fuel is increasing. Partly because the holidays are largely over, but also because mobility is also increasing with the (planned) relaxed corona measures.
Jurphaas Lugtenburg
© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.
