AleaSoft analyzes the markets of fuels, CO2 emissions rights and European electricity, in a week in which the general price decrease tendency of March in the European markets continues. This comes as the result of the decrease of the prices of fuels, the arrival of the spring and greater wind production.
Brent, fuels and CO2
Brent oil futures prices for May 2019 in the ICE market remain similar to the previous week: stabilized in a price range between $ 65 / bbl and $ 67 / bbl since February 15, although a slight upward trend is observed with prices in the upper range, closer to $ 67 / bbl. On Wednesday, March 20, a specific rise occurred reaching the value of $ 68.50 / bbl, a price that was not seen from the first half of November 2018. On Friday 22 the price closed at $ 67.03 / bbl, returning to the channel $ 65 / bbl $ 67 / bbl. For the next few days, in the absence of relevant international events, the price of Brent will remain below $ 68 / bbl.
The TTF gas futures in the ICE market for April, as in the previous weeks, maintains a downward trend since September 25, 2018, making six months since this decrease started. On Friday of the previous week, March 22, prices closed with a value of € 14.45 / MWh, which breaks the record low of the previous week which was already the lowest value of the last two years. Taking into account the slope of the prices in the last days, AleaSoft considers that in this coming week the downward trend will continue, with the possibility of falling below € 14 / MWh.
As in previous comments by AleaSoft, the evolution of API 2 carbon futures prices for the month of April in the ICE market has remained very aligned with the futures prices of the TTF gas for the period. In March, prices continued to fall to $ 66.15 / t, a value that had not been seen since July 13, 2017. As was stated the previous week in the AleaSoft analysis, taking into account the parallel evolution of prices of gas and coal, the price of coal can drop to $ 60 / t in the coming weeks, reaching the values of two years ago, as in the case of the price of gas.
The price of CO2 emissions rights futures for the reference contract of December 2019 in the EEX market closed on Friday, March 22, at € 20.67 / t. As in the previous week, AleaSoft considers a tendency to fall to € 20 / t as a reference for the coming days. This level may be broken down to the extent that the negotiations on the Brexit will show a closer exit scenario.
European electricity markets
Taking into account the seasonal temperatures related to the arrival of spring, the prices of electricity markets in Europe have had a continued slight decline pattern since the beginning of February. The downward trend in the prices of gas, coal and CO2 also influences the fall in prices. As was suggested by AleaSoft last week, it has also been influenced by relatively high wind production and solar photovoltaic and solar thermal production that increase as the hours of sunshine increase.
Taking into account the prices of this week there are two groups of markets. The N2EX markets in Great Britain and the Italian IPEX market, this time along with the MIBEL market in Spain and Portugal remain in the group with the highest prices, all with prices around € 50 / MWh. In the case of Great Britain and Italy, the fall in electricity market prices has been influenced by the fall in gas prices.
The Nord Pool markets of the Nordic countries and the EPEX SPOT markets of Belgium, the Netherlands, France and Germany with prices between € 35 and € 40 / MWh are in the range with the lowest prices. In the case of France and Germany, the markets had a rise in prices compared to the previous week due to a considerable drop in wind production.
For the next few days, AleaSoft forecasts do not show significant changes in temperature, but a higher wind and solar production added to the expected decrease in fuel prices will cause prices for the next few days to continue the downward trend.
In the European electricity futures markets, last week of March 18 the price of April 2019 continued to fall, in line with the decline in fuel prices. In general, between Friday, March 15 and Friday, March 22, the decrease was between 4% and 7%.
The futures of Germany, France and Spain in the EEX market and those of Portugal in the OMIP market for next April in the session of Friday 22 showed the lowest settlement price since the product is being negotiated. Also in the EEX market, Italian futures for the same product marked the historical minimum settlement price last week, of € 49.06 / MWh, on Monday, March 18.
Wind and solar production
During the past week the wind production experienced a significant drop in France and Germany. It also fell in Italy and to a lesser extent in Spain. For the next week AleaSoft foresees that wind production will be reversed, that is, generalized increases in all European countries.
Last week, solar production, which includes both photovoltaic and solar thermal technology, showed high values, especially in Germany, with an increase of 111% compared to the previous week. In the case of Italy, the increase in solar production was 12% while in Spain it decreased 12%. For the rest of the week in AleaSoft it is foreseen that, comparatively, the production in Germany will decrease, and that it will increase slightly in Italy and Spain.