Energy Commodities: 04/03/10

Unless stated otherwise, all prices are for the close of March 3.

Brent crude oil futures: US$78.86/bbl, down 0.5 per cent, as of GMT 9:00, March 4

WTI crude oil futures: US$80.46/bbl, down 0.5 per cent, as of GMT 9:00, March 4

German power: €47.53/MWh, down 0.46 per cent

Coal: €93.10/t, down 1.48 per cent

Natural gas: GB 31.05p/therm, down 1.74 per cent

EUAs for December 2010 delivery: €13.54/t, up 1.80 per cent

CERs for December 2010 delivery: €12.14/t, up 2.36 per cent

Latest buzz
Oil has retreated slightly as a result of somewhat mixed US inventory data from the EIA, putting an end to a two-day rally sparked by renewed optimism regarding the global economy. NYMEX crude closed up US$0.98/bbl and US$1.19/bbl, on March 2 and March 3, respectively. In contrast, in late afternoon trading, the benchmark contract for April delivery had dropped US$0.56 to US$80.31/bbl.

US crude inventories in the last week rose by 4.1mbbl to 341.6mbbl, while gasoline stocks edged up 0.7mbbl to 231.9mbbl. In contrast, US distillate inventories dropped 0.9mbbl. Analysts at Barclays Capital have commented on the latter: “This might herald the first signs of a pick-up in distillate demand.” Interestingly, the EIA has reported that total US fuel demand, averaged over the past four weeks stood at 19.3mbbl, up three per cent on year.

NYMEX natural gas futures have risen for a second day, prior to the release of more EIA data. The agency is expected to report a 129bnft³ drop in inventories according to 16 analysts polled by the Bloomberg news agency. The contract rose by US¢4 (one per cent) to settle at US$4.757/mBtu on March 3.

As expected, Iberian spot power has seen little change, given forecasts of increased power from wind farms, which are expected to feed as much as 7000MW into the region’s grid today. The downside was offset by an unscheduled stoppage at the 1000MW Vandellos II nuclear power plant. Wind power is expected to rise further over the next day, which should push prices down in the short term.

After the lack of direction seen on March 2, carbon traders in Europe quickly latched onto the result of an auction of 570,000 allowances for December delivery, which cleared at US$13.46/t. The news sparked bullish sentiment and pushed the value of EUAs up 1.8 per cent to €13.54/t. Meanwhile, AAU deals caused the CER-EUA spread to €1.40. There are stormclouds brewing as far as the wider, long-term outlook is concerned, with US Senator Lindsey Graham describing the current US cap-and-trade proposal as “dead” and Yvo de Boer, the outgoing head of the UNFCCC, declaring that the UN climate process needs “a good spanking” if it is to achieve anything.