Analysis Energy
Oil price rises, electricity weakens slightly
Crude oil listings showed a steady rise last week. Will the upper limit be moved or is this just an incident? The electricity market was not as spectacular as last week, but it is by no means quiet.
The oil market started Monday with a small decline. A barrel of Brent crude ended at $74,07. During the week, the price has been steadily rising and today (Friday, September 24) it stands at $77,47 a barrel. The price has thus reached the highest level in almost 3 years.
Analysts are divided on which direction the oil market is heading. Brent oil has been moving almost consistently between $70 and $75 a barrel since June. Current prices explore the upper end of the price range. The economic outlook is favourable, and some analysts say the upper bound will be moved soon. They see evidence of this in the buying behavior of speculators. Short positions are hedged. That is quite unusual and a sign that the price is expected to rise.
Is China throwing a spanner in the works?
Other analysts are less optimistic, mainly due to recent developments in China. Real estate company Evergrande is in deep trouble with a debt of $300 billion and there are fears that the company will go bankrupt. The real estate sector accounts for about a quarter of China's gross domestic product. A bankruptcy of Evergrande could therefore have major consequences for the Chinese economy. Just like the collapse of the American bank Lehman Brothers in 2008, the bankruptcy could also cause a domino effect in the global economy. China is very active on the oil market and actually all commodities markets.
Like crude oil, diesel has continued to rise in price. On Monday September 20, diesel still cost €110,86 per 100 litres. Today Friday 24 September that has increased to €112,31 per 100 litres.
Power continues to be expensive
No records have been broken this week, but prices on the electricity market remain at an all-time high. Last Sunday, September 19, the EPEX spot quotation was 'only' €106,03 per MWh, a price that has hardly been seen in recent years. The listing reached its highest level on Wednesday at €158,19 per MWh.
Little power from wind and sun, expensive coal and expensive gas remain the main cause of the historically high electricity prices, according to analysts. The price dips of this week, especially yesterday's dips are directly related to the supply of electricity, increasing wind immediately causes more supply and a small drop in the price.
The prices in the Netherlands are also higher than in Germany and France. France, in particular, has good control over the availability of electricity, with a lot of and relatively cheap electricity from nuclear power stations. It could also be worse. In Great Britain the prices are a bit higher than with us. Incidentally, a number of energy suppliers have already collapsed due to incorrect or insufficient hedging of the price movement.
Be careful with SDE+(+)
For entrepreneurs who produce energy and make use of the SDE+(+) subsidy, the high electricity prices can still get an annoying tail. warns the RVO† The amount of the subsidy is linked to the market value of the electricity. The more expensive the electricity, the less subsidy. The advance is determined once per calendar year and it is expected that the advances paid for this year will be higher than to which the entrepreneur is entitled.
Jurphaas Lugtenburg
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