Energy Commodities: 12/02/10

Unless stated otherwise, all prices are for the close of February 11.

Brent crude oil futures: US$73.79/bbl, down 0.5 per cent, as of GMT 9:15, February 12
WTI crude oil futures: US$74.93, down 0.3 per cent, as of GMT 9.15, February 12
German power: €47.79/MWh, down 0.69 per cent
Coal: €91.35/t, down 0.16 per cent
Natural gas: GB 34.33p/therm, up 0.97 per cent
EUAs for December 10 delivery: €13.19/t, down 0.53 per cent
CERs for December 10 delivery: €11.58/t, down 0.77 per cent

Latest buzz
NYMEX crude has been buoyed up by a heady mix of continuing severe cold weather across much of the US, an upwardly revised prediction by the IEA for oil consumption and greater market optimism regarding the future of the euro and the Greek economy.

The IEA has increased its forecast for 2010 global oil demand growth by 120,000bpd to 1.6mbpd, with worldwide consumption expected to average 86.5mbpd this year.

However, NYMEX crude fell back in Asian trading, given speculation that weekly oil data to be published today by the EIA will show a rise in US oil inventories, similar to the 7.2mbbl rise reported by the American Petroleum Institute in the previous week. If this occurs, crude is expected to drop back by US$1.50-2.00/bbl according to one trader.

Some interesting related news comes has come from Iraq, where Falah Alamri,the head of the country’s State Oil Marketing Organisation, has announced that Iraq will become the third Middle East oil producer to abandon WTI as a benchmark for pricing crude shipments to the US. The decision will come into effect in April and no doubt has been triggered over concerns that the contract does not accurately reflect global demand conditions, due to the importance attached to physical deliveries at the Cushing pipeline hub in Oklahoma.

The carbon markets witnessed little excitement over the course of February 11, due to the lack of support from the wider energy complex and the postponement of an EU decision regarding whether Poland is eligible to receive more EUAs for new power plants. Meanwhile, CERs appear to be trading in a slightly tighter spread in comparison to EUAs at €-1.5-1.65/t. Investors are showing markedly less appetite for Chinese CDM projects thanks to lingering uncertainty regarding the future of the CDM after 2012 and worries regarding project rejection that have been stoked by recent rulings by the CDM executive board.

As far as coal is concerned, the most interesting news to hit our desk this morning, is that Coal India is expecting to import 6-10Mt in the 2010/2011 fiscal year, compared to the estimated 1.5-1.7Mt for the current fiscal year. The issue is that demand is rising from steel producers and power plants, but domestic coal output targets are dropping due to delays at bringing new coal mining projects online.