Energy commodities: 25/06/2010

All prices unless otherwise stated are for the close of June 24

German power: €52.79/MWh, down 0.73 per cent
Coal: €99.50/t, down 0.00 per cent
Natural gas: GB43.11p/therm, down 0.10 per cent
EUAs for December 2010 delivery: €15.25/t, down 0.78 per cent
CERs for December 2010 delivery: €13.03/t, down 0.84 per cent
Brent crude oil futures for front-month 2010 delivery: US$76.24/bbl, down 0.3 per cent as of GMT 08:45, June 25
WTI crude oil futures for front-month 2010 delivery: US$76.39/bbl, up 0.2 per cent, as of GMT 08:45, June 25

Latest buzz

Oil seems set for its first weekly decline in three weeks as the markets appear to have refocused on the question as to whether the Eurozone’s debt crisis will hinder the global recovery, given a slump in the equity markets. NYMEX crude finished up 0.2 per cent yesterday, to settle at US$76.51/bbl, courtesy of the news that US durable goods orders rose by 0.9 per cent in May and applications for unemployment benefits fell from a two-month high, down 19,000 to 457,000,  Labor Department figures showed. However, when aircraft orders were factored into the durable goods order data, there was an overall decline of 1.1 per cent in May.

According to Oil Movements, OPEC will increase the volumes shipped to Asia, given buoyant demand from the region’s refiners. The cartel is expected to ship 23.73mbpd in the four weeks to July 10, up 0.7 per cent from the month ended June 12.

NYMEX natural gas fell back by just 0.1 per cent to close yesterday at US$4.80/bbl as the EIA reported that 81bnft³ of gas had been injected into storage in the week ended June 18. The inventory build was at the top end of the 78-82bnft³ expected by analysts and was therefore interpreted as a mildly bearish signal.

As far as the international coal market is concerned, the main news appears to be that the Baltic Exchange’s main sea freight index has fallen to its lowest level in over eight months, after 21 consecutive sessions of decline. This has had several knock-on effects. For example, coal can now be delivered to China at a landed rate of around US$105/t, according to traders. FOB prices at South Africa’s Richards Bay port are holding at ~US$90/t and therefore landed prices into China are slightly higher than for Colombian producers at US$107/t. Even with a coal import tax of 17 per cent, Chinese buyers are able to buy coal from these two countries at US$3-4/t less than from domestic producers. However, weakening demand on the back of higher hydropower generation is expected to start eating into China’s appetite for imported coal.

In the long term, Chinese import growth may be reduced somewhat thanks to the country’s growing biomass sector. The government will reportedly set a national standard price for electricity from biomass generation at around CNY0.75/kWh, said the China Securities Journal.

In related news, Yanzhou Coal Mining Co Ltd (NYSE: YZC) is looking to boost its coal output capacity to 100Mta during the 2011-15 period, according to comments made its vice chairman and general manager, Li Weimin. To this end, it will seek to create four large industrial bases in Yulin (Shaanxi province), Erdos (Inner Monogolia), Juye (Shandong province) and Australia in 2010-13.

EUAs and CERs followed the downward course plotted by the equity markets and a generally unsupportive energy complex, while the CER-EUA spread widened slightly to -€2.22, given news that Portugal has announced that its projections for Kyoto compliance have almost halved since its initial analysis, carried out back in 2006, partly as a result of the recession. Point Carbon reported that the European Commission has agreed to continue discussions concerning a EU carbon tax for GHG emitters not covered by the EU ETS.