Energy Commodities: 16/02/10

Unless stated otherwise, all prices are for the close of February 15.

Brent crude oil futures: US$73.41/bbl, up 1.2 per cent, as of GMT 8:45, February 16

WTI crude oil futures: US$74.79, up 1.2 per cent, as of GMT 9.00, February 16

German power: €47.46/MWh, down 0.40 per cent

Coal: €93.00/t, up 0.54 per cent

Natural gas: GB 34.00p/therm, down 0.44 per cent

EUAs for December 10 delivery: €13.13/t, up 1.39 per cent

CERs for December 10 delivery: €11.52/t, up 1.23 per cent

Latest buzz
WTI crude has performed strongly today, at one point climbing up to US$74.97/bbl in Asian trading. With markets closed in the US for the President’s Day holiday and in China, Hong Kong, South Korea, Singapore, Taiwan and Malaysia as a result of the Lunar New Year, trading volumes have been light. The main source of renewed optimism appears to be the news that the Japanese economy grew by an annualised 4.6 per cent in 4Q09. In addition, Barclays Capital said in a report that: “There are some signs of improvement in OECD countries as a whole with strong Japanese growth data… Worries about softening in China’s commodity demand are overblown.”
February 15 saw a mild rally of sorts on the carbon markets, but curiously, in the absence of any real fundamental support.

On the other hand, the CER supply situation is looking increasingly tight with only 6.8m CERs issued in January, compared to 2009’s monthly average of 11.25m. The same day also saw Iberian spot power prices record mild gains on the back of forecasts that suggest lower winds. As of February 15, 11.55am GMT, they were up €0.53 at €33.72/MWh. As a result of the forecast, Spanish wind power producers expect to produce 6000MW today, down from the 7200MW seen on February 15.

The coal markets have plenty of information to digest. China’s northern Shaanxi province has been reportedly hit by a “serious” coal shortage, with the region’s biggest power plants down to 1Mt of thermal coal, equivalent to just one week’s supply of thermal coal in January. According to a Dow Jones Newswire report this represents a drop of 28 per cent from December. The data has raised concerns over the possibility of rationing in Shaanxi and nearby provinces, unless coal can be imported from Australia or Indonesia.

Putting more fuel on the fire is a report from the China Electricity Council, which indicates that the tight coal supply is difficult to change in the short term. It estimates that supply of thermal coal will rise to approximately 1.6bnt in 2010, while some analysts have predicted that coal consumption will hit 1.66bnt, given an expected nine per cent increase in electricity consumption.