Background Energy
OPEC+ sets target oil price around $70 a barrel
OPEC+ made a decision this week on which direction to take with production. Is the cartel confident in its growth and does it dare to push through its plans for expansion? The electricity market has been showing a clear direction of higher prices for a few weeks now. That will continue this week.
The price of a barrel of Brent crude oil was $73,47 on Monday, its highest level this week. This was mainly due to concerns about the possible damage from Hurricane Ida to oil installations and refineries in the Gulf of Mexico. On Wednesday, September 1, the price dropped to $71,28 a barrel due to OPEC+ rumors. Meanwhile, the price has risen again and Brent oil is at $73,16 per barrel.
The Russia gave the market quite a scare ahead of the OPEC+ meeting held this week. The cartel of oil-producing countries met last Wednesday (September 1) to discuss its strategy for the coming months. Oil Minister Alexander Novak said during the pre-press moment: "Of course Russia can produce much more oil than OPEC's allotted quota."
Wrong explanation
The traders thought they could conclude from that comment that Russia was dissatisfied with the quota allocation. The country thus appeared to be adopting a strategy similar to that of the United Arab Emirates a month earlier, in order to obtain a larger quota with a different reference period. In retrospect, according to some analysts, it was more of a signal from the Russians to the small OPEC+ countries to keep them in line by rubbing them under the noses of the power and low cost of the Russian bear.
OPEC+ has decided to continue the step-by-month increase in production, starting in September, at 400.000 barrels per day. The cartel has hinted that it is targeting an oil price of around $70 a barrel. With the continuation of the production increase, OPEC+ nevertheless expresses a high degree of confidence in a rapid economic recovery.
The price development of diesel is out of step with that of oil. From August 20, the diesel price is in a fairly constant upward trend. More than €1 has been added this week. Monday, August 30, diesel was worth €108,52 per 100 liters. That has increased to €109,60 per 100 liters today (Friday 3 September).
Little power supply
Electricity is incredibly expensive. Sunday (August 29) was, as usual, the day with the lowest quotation. The price on the EPEX Spot at €80,65 per MWh, until 3 months ago, was a price that was barely achieved on weekdays. That rose during the week to a record €124,07 per MWh yesterday (Thursday, September 2). Today the price has dropped slightly again, but remains very high at €112,30 per MWh.
There are several reasons for the high prices. First of all, gas, coal and emission rights are expensive. That remains the basis for the electricity price. In addition, the yields of solar panels and wind turbines have recently been disappointing. Not only the Netherlands suffers from this, but also Germany and Great Britain. And maintenance work on the NordNed transmission cable makes it difficult to import cheap Scandinavian electricity.
Several analysts do not expect any major shifts in prices for the coming week. The supply of electricity remains somewhat on the tight side. Although some more sun is forecast, the supply of sustainable electricity remains limited in most forecasts. Especially the windless weather plays a part in the energy supply.
SDE++ now needed for temporary power storage
Holland Solar, the trade association for companies active in the sale, installation and maintenance of solar panels, is Solarmagazine's plea for subsidies for the short-term storage of wind and solar energy to be made available as soon as possible. Messages about a problem on the power grid keep appearing. Many problems can be solved by including measures such as a battery for temporary storage in the SDE++ that will open on 5 October. The day is short, but that should be possible according to Holland Solar.
Jurphaas Lugtenburg
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