The London Energy Brokers’ Association (LEBA), the industry association representing regulated wholesale market brokers in the OTC and exchange-traded UK and liberalised European energy markets, has published its regular monthly volume report and additional accompanying analysis covering the main European gas, power, coal and emissions markets.
According to LEBA, “the great slump in prices continues”. The European API2 Front Month started the month at US$ 82.85, peaked at US$ 84.00 on 3 May, fell to a low of US$ 81.90 on 17 May and finished the month on US$ 82.10. Prices are at their lowest level for three years and, as a result, German utilities are burning record amounts of coal. During the 2011 and 2012 Indonesia, Australia and Russia increased exports by 25%, leading to the current international glut.
However, LEBA notes that there may be some respite ahead: “Prices are unlikely to fall lower as US imports are being reduced and production at mines in Russia and Poland cut”.
Meanwhile, the European carbon market is caught in the doldrums: “Following the failure of the European Parliament to solve the supply issue in April the market is gripped by political uncertainty”. LEBA expects the value of carbon allowances to remain at “historic lows” until EU legislators regroup and find a long-term solution to the oversupply. In May, spot prices started the month at € 2.89 and drifted up, closing on € 3.90.
Adapted from press release by Jonathan Rowland.
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