Energy Commodities: 09/03/10

Unless stated otherwise, all prices are for the close of March 8.

Brent crude oil futures: US$79.68/bbl, down 1.0 per cent, as of GMT 9:15, March 9

WTI crude oil futures: US$81.15/bbl, down 0.9 per cent, as of GMT 9:00, March 9

German power: €46.40/MWh, down 1.07 per cent

Coal: €90.35/t, down 1.26 per cent

Natural gas: GB 30.20p/therm, up 1.34 per cent

EUAs for December 2010 delivery: €13.10/t, down 1.50 per cent

CERs for December 2010 delivery: €11.72/t, down 1.60per cent

Latest buzz
NYMEX crude closed up slightly higher on March 8th, thanks to continued optimism sparked from last week’s US jobs report and increased confidence in the Eurozone, as fears of a Greek debt default have faded.
Crude for April delivery settled up US¢37 at US$81.8/bbl after earlier hitting a high of US$82.47/bbl. The market came off the boil as a result of gains in the value of the US dollar.

There are signs that a return to a relatively tight demand/supply balance could be imminent. The futures curve between front month and second month contracts has flattened to just US¢40/bbl, from the US$2.35/bbl seen in late 2008. Some analysts are predicting that the market could soon flip into “backwardation” in which the front month contract trades at a premium. This would effectively signal a recovery in world crude demand and put pressure on inventories. The IEA predicts that global oil consumption will rise by 1.8 per cent this year to 86.5mbpd, as a result of rising demand from emerging economies such as China and India.
“What you’ve got is a global balance that is tightening, and probably more quickly than a lot of people are expecting,” says Amrita Sen of Barclays Capital (Financial Times).

Over in Europe, forward Nordic power prices fell on March 8th, after a day of volatile trading, prompted by a drop in the day-ahead spot price from €69.09 to €67.43. However, traders are expecting a bull run due to the fact that water levels at hydropower plant reservoirs are critically low and two of Sweden’s 10 nuclear reactors are currently shut down with another two running at below full capacity.

The carbon markets have also fallen back due to a 1.07 per cent drop in the 2011 German power contract. However, the rest of the energy complex was essentially favourable, particularly in terms of cheaper coal and more expensive natural gas, which served to put a floor under losses. The previous week has proven to be somewhat disappointing for CERs, with only 3.6m issued from 10 CDM projects.