The German Federal Association for Wind Energy has said that it expects 1900MW of new wind capacity to be installed this year, down slightly from the 1917MW installed in 2009. In addition, it expects the global wind industry to also add less capacity in 2010 than in 2009. It projects that 38GW of new capacity will be installed, compared to the 38.343GW installed in 2009.

German power: €49.54/MWh, up 0.47%
Coal: €97.19/t, down 0.11%
Natural gas: GB40.28p/therm, up 1.47%
EUAs for December 2010 delivery: €13.76/t, up 0.29%
CERs for December 2010 delivery: €11.64/t, up 0.17%
Brent crude oil futures for front-month 2010 delivery: US$76.30/bbl, up 0.3% as of GMT 09:15, July 29
WTI crude oil futures for front-month 2010 delivery: US$77.24/bbl, up 0.4%, as of GMT 09:15, July 29

Latest buzz

Oil prices have rebounded after yesterday’s precipitous decline, sparked by a surprise 7.3mbbl build in US crude inventories for the previous week, reported by the EIA. This was partly driven by a 1.18mbpd increase in imports to 11.2mbpd, the highest level seen since the week ending August 25, 2006.

The news caused NYMEX crude for September delivery to fall to a one week low, settling down US¢51 to US$76.99/bbl. Today has seen a return to above US$77/bbl, as a result of a fall in the value in the dollar against the Euro, which is enjoying positive momentum as a result of a strong performance from its banking sector in stress tests reported on July 21. There remain concerns regarding the future outlook for oil demand, given that the Federal Reserve in its latest Beige Book Report said that US economic activity had risen only modestly in June. Further concerns were raised when an unexpected 1% drop in US durable goods orders and was reported on July 28. The Conference Board also reported that US consumer confidence has fallen to its lowest level in five months in July.

NYMEX natural gas for August delivery rose by 2.91% to settle at US$4.811/mBtu, while gas for September delivery rose 3.36% to US4.802/mBtu. The main impetus behind the rise in prices remains the high temperatures across most of the major gas-consuming regions, but support also came from traders buying back previously sold contracts in order to cover their positions ahead of the August contract expiration. In addition, the fact that the Atlantic storm season is expected to last through to September, is making it difficult to justify a sale off, despite its lack of impact to date.

Prompt coal cargo prices for European delivery and Richards Bay FOB dropped by around US¢50/t yesterday, with the latter trading at US$89.50/t, despite the news that heavy seasonal rains have significantly impacted on Indonesian coal output in South Kalimantan and affected ship loadings. If the situation continues for another week, it could potentially lead to delays or producers declaring force majeure. Some sellers of prompt South African cargoes are holding back to see how this state of affairs develops, while ample supplies at Australian ports are thought to be one of the main reasons why prices have yet to rise.

Over in China, the coal industry has been doing remarkably well. According to the National Development and Reform Commission, the sector generated a total profit of CNY122.5bn in the first five months of this year, up 80.9% YoY. Domestic coal production rose to 1.57bnt in the first half of 2010, up 20.1%, while imports rose to 81Mt over the same period up 70.6% YoY. In contrast, exports amounted to just 10Mt, down 13% YoY. Coal prices have risen since they hit a low of CNY680/t in late March, to around CNY765/t and the commission is expecting prices to be relatively stable in the second half of this year, partly due to initiatives designed to reduce pollution and emissions.

European carbon prices have risen, thanks to a mildly supportive energy complex with oil prices and the 2011 German baseload contract being the main factors. CERs recorded smaller gains, causing the DEC10 CER-EUA spread to widen to -€2.12/t and the DEC12 spread widening to -€3.20/t. Interestingly, four analysts polled by the Reuters news agency viewed current EUA prices as a reason to buy, given expectations of an European economic recovery and a tighter market for emissions allowances in Phase III of the EU ETS which begins in 2013.

The plant, located at L’Hospitalet del Infant near Tarragona, belongs to Endesa and was commissioned in August 1987.

The Spanish nuclear fleet is made up of eight reactors at six locations and represents roughly 20 per cent of the country’s installed generating capacity. The government essentially reversed its policy of nuclear phase-out back in July 2009, when it decided to extend the lifetime of the country’s oldest nuclear reactor, the Garona plant in northern Spain, until July 2013.

German power: €49.45/MWh, down 0.92 per cent
Coal: €98.01/t, down 0.80 per cent
Natural gas: GB39.52p/therm, down 5.35 per cent
EUAs for December 2010 delivery: €13.94/t, down 2.04 per cent
CERs for December 2010 delivery: €11.87/t, down 1.66 per cent
Brent crude oil futures for front-month 2010 delivery: US$75.61/bbl, up 0.3 per cent as of GMT 10:15, July 22
WTI crude oil futures for front-month 2010 delivery: US$76.93/bbl, up 0.3 per cent, as of GMT 10:15, July 22

Latest buzz

Wednesday saw NYMEX front-month crude futures surge to a three-week high of US$78.61/bbl on the back of new data indicating rising Chinese energy demand. However, a combination of gloomy market sentiment sparked by a testimony given by the Federal Reserve chairman, Ben Bernanke and a surprise rise in oil inventories removed support, causing the contract to close at US$76.52/bbl. China’s oil consumption hit a new record in June and is up 10% on year. The EIA reported an increase of 400,000bbl for the previous week, running counter to analysts’ expectations of a 1.6mbbl stockdraw. Gasoline and distillate inventories also rose. The Dow Jones Industrial average fell by 1.0% after Mr Bernanke’s warned that the economic recovery underway in the US is still fragile.

Natural gas futures declined on the back of bearish expectations that the EIA will today report a 51bnft³ injection into storage for the week ended July 16, according to a Bloomberg poll. NYMEX gas for August delivery fell by US¢7.7 to settle at US$4.513/mBtu. Last week, the EIA reported a 78bnft³ increase in natural gas inventories, which put stockpiles at 10.7% above the five-year average.

Over in South Africa, workers have ended a strike at the Richards Bay coal terminal, after the South Africa Transport and Allied Workers’ Union accepted the company’s original offer of a 9.5% increase in wages, compared to the 4.6% rate of annual consumer price inflation seen in May. According to the company, terminal operations were unaffected by the strike. Coal for delivery into Europe and FOB Richards Bay price fell by US¢75 yesterday due to limited activity from market participants. Many are holding off until end-user buying resumes in September and there are concerns that rising hydropower output in China will undermine Chinese demand for coal, further softening prices on the international market. An August-loading South African cargo was bid at US$86.00/t and offered at U$89.00.

EUAs and CERS recorded further losses yesterday, primarily in response to an near 1% drop in the value of the 2011 German baseload contract and the fall in UK natural gas prices to below GB40p/therm. The German government’s auction of 750,000 EUAs cleared at €13.94 in the afternoon. CER prices benefited from some support, thanks to the news that the UNFCCC is considering contingency plans for the Clean Development Mechanism if a successor to the Kyoto Protocol, which expires in 2012, fails to materialise. The plans include potentially extending existing caps into 2013 and 2014. The CDM board is also soon to examine 24 projects currently under formal review. These have the potential to generate over 20m CERs by 2013.

German power: €51.07/MWh, up 0.16 per cent
Coal: €98.71/t, up 0.43 per cent
Natural gas: GB46.57p/therm, down 0.92 per cent
EUAs for December 2010 delivery: €13.95/t, down 0.43 per cent
CERs for December 2010 delivery: €11.86/t, down 0.75 per cent
Brent crude oil futures for front-month 2010 delivery: US$76.08/bbl, up 0.43 per cent as of GMT 10:15, July 16
WTI crude oil futures for front-month 2010 delivery: US$76.71/bbl, up 0.6 per cent, as of GMT 10:15, July 16

Latest buzz

NYMEX crude fell yesterday as a result of gloomy economic data from the US and China, giving up US¢42 to settle at US$76.62/bbl, while Brent crude dropped by US¢58 to finish at US$76.19 on the ICE futures exchange. The US Federal Reserve reported that industrial production rose by 0.1 per cent last month, while factory activity in New York and Philadelphia slowed. This sharply contrasts with the 1.3 per cent increase seen in May and factors in a 0.4 per cent decline in manufacturing output, ending three months of back-to-back gains. The impact would have been greater if it were not for a report that indicated that US new jobless claims have fallen to a two-year low and the fact that the news triggered a slide in the value of the US dollar.

As of writing, the oil markets seemed to be recovering from yesterday’s losses, possibly as a result of some traders taking the opportunity to pick up oil at a discount.

According to UK consultancy Oil Movements, seaborne OPEC oil exports (excluding Angola and Ecuador), will rise by 20,000bpd to 23.560mbpd in the four weeks to July 31. The cartel has announced that it is holding its forecast for world oil demand growth in 2010 constant at 950,000bpd, meaning that it expects to the world to consume an average of 85.36mbpd over the course of this year. OPEC is also predicting that oil demand will rise by 1.05mbpd in 2011 to 86.41mbpd and that non-OPEC supply will grow in 2011 by 0.3mbpd to 52.2mbpd, thanks to gains by Brazil, Canada, Azerbaijan, Colombia and Kazakhstan offsetting declines from Britain, Norway and Mexico. Unsurprisingly, OPEC expects China to lead the world in oil demand growth, with Chinese oil consumption predicted to rise by 0.4mbpd in 2011.

US Natural gas prices rose yesterday following a report from the EIA, indicating that 78bnft³ of natural gas was injected into storage over the past week, towards the low side of predictions by market participants. As a result, inventories are down 1.1 per cent on year, but 10.7 per cent above the five-year average. Analysts polled by Platts had been expecting an increase of between 78 and 82bnft³. NYMEX natural gas for August delivery rose by US¢28 to US$4.586/1000ft³, to the highest settlement price seen for two weeks. The heatwave that has hit much of the country has pushed electricity generation up by 8.7 per cent this week on year, according to the Edison Electric Institute.

Yesterday saw little action on the coal markets with few trades reported. Coal prices for cargoes for delivery to Europe and FOB Richards Bay dropped by around US¢50/t. According to traders, demand from China and India for spot cargoes is good and is underpinning current prices. Indonesia’s rainy season is limiting its participation on the market and causing Chinese buyers to look to South Africa instead. Despite a noticeable lack of prompt demand, European DES ARA prices are still holding at around US$90/t, partly as a result of low freight rates.

The carbon markets also suffered from a lack of direction on July 15, with EUAs marginally edging down to just below €14/t. The energy complex gave conflicting signals, with a slight rise in 2011 German power prices largely cancelled out by the combination of cheaper natural gas and more expensive coal, along with the decline in Brent crude. CERs saw sharper declines and as a result, the DEC10 CER-EUA spread widening to -€2.09, despite the news that Kansai Electric power in Japan is looking to buy 500,000 CERs from Vietnamese hydropower projects by the end of 2012. Some negative sentiment may have been sparked by the fact that two European members of parliament have called for a ban on the use of CERs generated from HFC23 destruction projects.

German power: €50.99/MWh, down 0.43 per cent
Coal: €98.29/t, down 0.33 per cent
Natural gas: GB47.00p/therm, down 3.69 per cent
EUAs for December 2010 delivery: €14.01/t, up 1.16 per cent
CERs for December 2010 delivery: €11.95/t, up 1.96 per cent
Brent crude oil futures for front-month 2010 delivery: US$76.91/bbl, up 2.0 per cent as of GMT 10:15, July 15
WTI crude oil futures for front-month 2010 delivery: US$77.13/bbl, up 1.2 per cent, as of GMT 10:15, July 15

Latest buzz

According to the EIA’s “This Week in Petroleum” report, crude inventories dropped by 5.1mbbl for the week ended July 9, roughly double the 2.6mbbl drawdown expected by analysts in a Platts survey. However, both gasoline and distillate inventories surprised the market by rising by 1.6mbbl and 2.9mbbl, respectively. On the whole, the report has been attributed as generally bullish for crude, with the oil product gains largely attributed to a post-Independence Day holiday drop-off in long-distance travel. The data does call into question the methodology of the American Petroleum Institute, which reported a 1.74mbbl increase in crude stockpiles for the same period. The EIA indicates that crude inventories at Cushing, Oklahoma, the physical delivery point for WTI crude, rose by 314,000bbl to 36.1mbbl, while fuel demand fell by four per cent to 18.8mbpd in the week ended July 9.

NYMEX crude for August delivery settled on Wednesday at US$77.04/bbl, down significantly from an intraday high of US$78.15/bbl. It has since fallen further due to bearish macroeconomic Chinese and American data. China’s GDP growth in 2Q10, fell to 10.3 per cent, from the 11.9 per cent seen in 1Q10, while the US Federal Reserve has warned that the outlook for the US has softened. Brent crude for August delivery finished up US¢12 at US$76.77/bbl, but the more actively-traded September contract was down US¢43 at US$76.23/bbl. The contract for August delivery expires today.

US natural gas for August delivery on the NYMEX finished trading yesterday down US¢4.8 at US$4.306/mBtu, after recovering from an intraday low of US$4.303/mBtu. The contract has been trading in a relatively tight range due to the fact that the bullish sentiment sparked by an expectant heatwave has mostly been contained as a result of high inventories and a strong outlook for domestic production. According to a Dow Jones poll of 25 market participants, the EIA is expected to announce today that 76bnft³ of natural gas was injected into storage during the week ended July 9, which if accurate, would mean that inventories stand at 2.838tnft³, 9.6 per cent above the five-year average, but down 1.2 per cent on year.

One development that has important implications for the international coal market is the precipitous decline in the Baltic Dry Index, which has fallen by nearly 60 per cent over the past 34 days. There are also signs that the drop-off is set to continue, such as the fact that Chinese imports of iron ore and coal declined last month by six and eight per cent, respectively. In addition, the global fleet rose by 23 per cent in the first half of this year, as new vessels were entering service at the rate of 16-a-month. This has now risen to around 23-a-month. The situation is likely to push coal prices down and allows companies to source coal from further abroad.

According to China’s custom authorities, the country exported 10.14Mt of coal in the first six months of this year, down 13.1 per cent on year. The total value of coal exported fell more markedly, dropping by 26.8 per cent YoY to US$1.05bn. Over the period, China’s average export price was US$103.3/t FOB, down 15.8 per cent on year. Coal imports for the first five months of the year stood at 68.98Mt, up 114 per cent YoY and are thought to be on track to reach 100Mt for the whole year. On July 12, statistics from the Qin Huangdao port indicated that thermal coal with a calorific value of 5800kcal/kg was trading at CNY780-790/t, while that with a calorific value of 5500kcal/kg was trading slightly lower at CNY750-760/t. Prices at the port have effectively remained constant for seven straight weeks, breaking the usual trend of higher prices after the low demand typically seen in April and May. It is thought that the lack of excitement on the market is due to high inventories at power utilities, coupled with measures enacted by the NDRC to rein in the price of coal on strategic and anti-inflationary grounds. However, market participants believe that it will not be able to change the upward direction of the market.

Over in the US, the heatwave has caused 10 analysts surveyed by the Bloomberg news agency to predict on average that thermal coal will rise to US$68/st this year. It traded at US$63.30//st on the NYMEX on July 13. The EIA is expecting coal consumption for power generation to rise by 4.6 per cent in 2010 to 979.4mst and electricity demand to rise by 3.5 per cent in the second half of this year. Prices are already up 29 per cent on year, on account of what some believe could be the hottest summer for 15 years and the resulting demand for air conditioning. Gains are expected to be limited by the fact that 10 per cent of the nation’s thermal power plant fleet is capable of fuel-switching between coal and natural gas with the majority located in the Southwest of the country.

Coal prices for delivery in Europe and FOB Richards Bay rose slightly yesterday. Four South African cargoes traded at between US$89.40 to 90.25/t, while August DES ARA cargo traded at US$91.00/t. According to one broker, market activity remains subdued. This is likely to be due to high inventories at European power utilities. However, Russian exports are expected to be hit as a result of rail privatisation later this year, but at this point it is thought too early for utilities to start arranging alternative supplies.

EUAs edged up fractionally yesterday, despite a less than support energy complex, with a dramatic drop in natural gas prices weighing particularly heavily on the market. Rumours of a sell-off by utilities also helped to keep gains to a minimum. However, heavy buying took place in the afternoon. CERs outperformed EUAs, with DEC12 CERs attracting the majority of interest, due to Mercuria’s deal to purchase 1m post-2012 CERS from a project in Guinea. The DEC10 CER-EUA spread finished at -€2.06.

The largest single buyer of UN carbon credits in Europe was Swedish energy group Vattenfall, which used credits to cover around 7.4 per cent of its emissions. Polish Group of Energy (PGE) , Enel/Endesa (MCE: ELE.MC) and Salzgitter (XETRA: SZG.DE) of Germany followed with smaller credit purchases.

Most of the sales refer to projects to eliminate industrial gases, a controversial subject with the UN coming under increasing pressure to change the award system. The disagreement arose as the factories that produce the gas are paid considerably more in credits than the cost of the gas incineration equipment.

Under the rules of the EU ETS, companies may supplement their carbon allowance quotas by buying in credits under the UN’s clean development mechanism, which offers a separate carbon trading system to the EU ETS. The system enables projects that cut emissions in the developing world to generate credits for the investors.

“Until the exact causes are known, the precautionary principle should prevail,” he said in remarks prepared for a speech to the European parliament.

“Given the current circumstances, any responsible government would at present practically freeze new permits for drilling with extreme parameters and conditions.”

Mr Oettinger is also calling for a new regulatory structure for the industry to ensure more robust regulation at the national level.

His comments have been attacked by Oil & Gas UK, the British industry group that represents energy companies operating in the North Sea. The region is currently seeing a resurgence in interest from E&P companies, partly as a result of the Gulf of Mexico moratorium and needs deepwater development to slow the rate of decline in oil production.

Fortunately for the industry, the European Commission has little direct power in terms of regulating offshore drilling, but it does have some authority over health and safety in the industry, as well as environmental matters.

Mr Öttinger will be holding two meetings with 18 oil companies in Brussels on July 14 to discuss the status of current safety technologies and the observance of EU regulations.

German power: €51.42/MWh, down 0.94 per cent
Coal: €98.66/t, down 0.90 per cent
Natural gas: GB48.53p/therm, down 1.47 per cent
EUAs for December 2010 delivery: €14.85/t, down 2.17 per cent
CERs for December 2010 delivery: €12.50/t, down 1.73 per cent
Brent crude oil futures for front-month 2010 delivery: US$73.80/bbl, up 0.4 per cent as of GMT 09:15, July 8
WTI crude oil futures for front-month 2010 delivery: US$74.46/bbl, up 0.2 per cent, as of GMT 09:15, July 7

Latest buzz

Crude futures have experienced a rebound, climbing as high as US$75/bbl on the NYMEX in Asian trading today, courtesy of a weaker US dollar and a better than expected June Australian employment report. Front-month NYMEX crude close at US$74.07/bbl on Wednesday. The Australian Bureau of Statistics indicated that 49,500 jobs were added to the labour force in June, compared to earlier predictions of 15,000. Support also came from the Dow Jones Industrial Average, which posted its largest one-day gain since May 27 and the wider equity markets, which have rallied as a result. Additional positive sentiment has come from the IMF, which has upwardly revised its estimate for global GDP growth this year to 4.5 per cent from 4.0 per cent. It reports that the world’s economy grew strongly in the first half of this, on the back of strong growth in Asia. However, it has warned that risks have increased and there have been setbacks in terms of financial stability.

Fundamentals also have played a role in the surge. The American Petroleum Institute released data after the NYMEX settlement yesterday indicating that crude inventories had fallen by 7.26mbbl for the week ended July 2. A Dow Jones survey is expecting the EIA to report a more modest stockpile draw down of 1.8mbbl. The agency has revised its projections for global oil demand and now believes that consumption will rise by 1.56mbpd in 2010 to 85.82mbpd, up 60,000bpd from its earlier estimate. It predicts nearly all of the growth will come from outside of the OECD, with growth led by China, Saudi Arabia and Brazil.

US natural gas prices finished down in New York yesterday, falling by 2.5 per cent to US$4.565/mBtu, but higher than its intraday low of US$4.555/mBtu. The decline has been attributed to traders focusing on high inventories. The week ended June 25 saw gas stockpiles stand at 2.684tnft³, down one per cent on year, but 12 per cent above the five year average. The EIA is currently expected to report a injection into storage of 73bnft³ for the week ended July 2, according to a Dow Jones survey, and has predicted that storage levels will hit 3.81tnft³ by October. In its Short-Term Energy Outlook, the EIA expects US gas production to average 61.26bnft³pd over the course of this year, up from its previous estimate of 61.22bnft³pd and 2.1 per cent above the figure recorded for 2009. It also expects prices to average US$4.93/mBtu in 4Q10, up from the June forecast of US$4.76/mBtu, and it has predicted that the price of natural gas will average US$4.84/mBtu for the year.

Some support will continue to come from high temperatures, with the National Weather Service forecasting above normal temperatures for the Northeast, the Midwest and areas in the Mid-Atlantic and Great Plains.

Over in Europe, EUAs for December 2010 delivery have finished at their lowest level in over six weeks (€14.85/t), on the back of a 2.8 per cent decline in value of UK gas for winter delivery, following the 2.4 per cent loss recorded on Tuesday. Cheaper natural gas reduces the incentive for power utilities to burn coal and therefore buy carbon credits, as using natural gas for power generation produces roughly 50 per cent less CO₂ than coal. A 0.94 per cent decline in the value of 2011 German power also helped to drag EUA prices lower. Meanwhile, CERs took less of a battering, with the DEC10 CER-EUA spread falling to -€2.35, despite news that any plans for an Australian carbon trading scheme will continue to be deferred for two years. Some support may have come from the EIA’s predictions that US emissions will rise by 3.2 per cent on year in 2010, due to the economic recovery.

German power: €51.91/MWh, down 1.22 per cent
Coal: €99.58/t, down 0.24 per cent
Natural gas: GB50.26p/therm, up 0.50 per cent
EUAs for December 2010 delivery: €15.18/t, down 1.36 per cent
CERs for December 2010 delivery: €12.72/t, down 1.78 per cent
Brent crude oil futures for front-month 2010 delivery: US$71.12/bbl, down 0.5 per cent as of GMT 08:45, July 7
WTI crude oil futures for front-month 2010 delivery: US$71.72/bbl, down 0.4 per cent, as of GMT 08:45, July 7

Latest buzz

NYMEX crude oil for August delivery settled for the first time since Friday at US$71.98/bbl, down 16 cents, from the previous session. Some gains were made in the afternoon, Singapore time, with the contract reaching US$72.38/bbl. However, as of writing, it has fallen back to below US$72/bbl, due to a strengthening US dollar. Oil prices have been largely taking direction from equities, but some support has come from expectations of inventory drawdowns in the US. Analysts are currently expecting that US crude stockpiles declined by 2.6mbbl in the week to July 2, according to a Reuters survey, while US refinery runs are thought to have risen by 0.1 per cent on the previous week to 88.5 per cent and many are looking to the release of US inventory data from the American Petroleum Institute (out today at 16:30EDT) and the EIA. The latter is scheduled to release its “This Week In Petroleum” report tomorrow at 13:00EDT, as a result of the Independence Day Holiday.

A bearish signal has come from Bank of America, which has downwardly adjusted its 2011 GDP growth forecast for the US to 2.6 per cent from 3.3 percent, but this has been largely offset by the news that China’s National Development and Reform Commission is bringing forward plans to invest US$100bn in infrastructure projects in its remote western provinces, which should underpin Chinese fuel demand going forward. As mentioned yesterday, some additional support is coming from the storm developing off Mexico’s Yucatan peninsula. Although it expected to take a course similar to that of tropical storm Alex, there remains the possibility that it could impact on oil and gas rigs in the Gulf of Mexico.

OPEC has reported that its proven crude oil reserves increased by four per cent in 2009, with Venezuela making the largest gains. As a result, total OPEC reserves stood at 1.064tnbbl. Venezuela’s share has risen to 211.2bnbbl. The cartel’s crude oil reserves grew by a reported 7.9 per cent in 2008, the largest increase seen in 20 years.

Natural gas futures rose yesterday on the NYMEX as baking temperatures across much of the American Northeast has driven up demand for gas-fired power generation. Gas for August delivery rose by 3.86 per cent to US$4.868/mBtu, while physical natural gas prices spiked higher. Natural gas for next day delivery at the Transcontinential Zone 6 in New York trading rose by an impressive 18 per cent to US$5.65/mBtu. The National Weather Service is expecting above-average temperatures in parts of the Northeast over the coming week, but normal temperatures are said to be in store for the Mid-Atlantic and New England regions, together with most of the western US.

According to the New York Independent System Operator, the State’s power demand reached 33,450MW as of 16:22h, yesterday, even after it asked some commercial users whose total demand amounted to around 400MW to reduce their usage until 19:00. Without their assistance, it is thought that the State’s power consumption could have reached the all-time high recorded on August 2, 2006, at 33,939MW. The situation drove wholesale electricity prices in the city to US$185.9/MWh, while Long Island users saw them rise to an eye-watering US$250/MWh.

Given the above, it is perhaps unsurprising that Genscape has reported that coal stockpiles at US power plants fell again this week, dropping by 1.7 per cent and down 9.2 per cent on year. As of Monday, US power utilities had 60 days of coal-burn on hand (164.6mst), one (16.6mst) less than in the previous week. Although hot weather has been a factor, the main drivers are still thought to be the economic recovery mixed with the lag in coal output as domestic coal producers have yet to ramp up their output, after making cuts a year ago.

Over in the Asia Pacific, Tokyo Electric Power (TEPCO) has agreed to buy Australian thermal coal from Xstrata Coal for AUD103/t (US$87.11). The new deal is 30 per cent up on year and is AUD5/t higher than the April price agreement signed this year. Sources have indicated that Rio Tinto has agreed to sell its Australian thermal coal at the same price.

The Chinese government is looking to impose a new five per cent price-based tax on coal, oil and gas extraction in its western provinces, which will lead to higher costs for the country’s energy producers. This is likely to have only a mild impact on supply and should be interpreted as a bullish signal, given its aim of supporting development in the area. According to Dong Yeuying, secretary general of the China Coal Transportation and Distribution Association, China is estimated to have produced 1.57bnt of coal in the first half of this year, up 20 per cent on year and thermal coal consumption is thought to have risen by a similar level (19.3 per cent) to 856Mt.

In Europe, EUAs retreated yesterday, their strength sapped by a weak and unsupportive energy complex. In addition, some traders are looking to see the impact of an upcoming 4.4m EUA auction by the UK auction before returning to the market. Meanwhile, CER prices remain burdened by the lack of a decision on HFC23 destruction projects. THE DEC10 CER-EUA spread has widened as a consequence to -€2.46.