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MARKET INTELLIGENCE

www.energymarketprice.com

WEEKLY ENERGY MARKET REVIEW

Market Intelligence Group

WEEK 33, 2015

1

This document may not be reproduced or transmitted in

any form or by any means, electronic or mechanical, for

any purpose, without our prior written permission.

This report contains a range of theoretical curves, called “EMP structural prices”. The EMP structural prices are developed by EnergyMarketPrice analysts on the basis of a range of criteria pertinent for the respective markets. Specifically, oil EMP structural price takes into consideration US refinery capacity, crude runs, EIA crude stock levels and speculative positions in crude oil at NYMEX. Electricity EMP structural prices are constructed on the basis of oil, natural gas, uranium, coal, carbon emissions transposed to the national power parks (taking also into account nuclear outages, where relevant). These curves have as a sole aim to aid understanding the influence of different factors on real market prices. These curves should not be used for any commercial quotations. This report contains a range of flashes indicating the expected market trend for the short term. Upward flashes indicate that the market price is expected to increase. Downward flashes indicate that the market price is expected to decrease. Straight flashes indicate that the market price is expected to remain in the range in the short term. The expectations are based on EnergyMarketPrice analysts’ assessment, and there should be no liability on their part related to any risks taken on the basis of these assessments.

Note on EMP structural prices and market views

2

Power forwards

CO2

Coal

HIGHLIGHTS

Brent rose 0.9%, snapping a

string of six weekly losses, as the front-month September contract

approached expiration.

Distillates slipped as the

market remained well supplied.

Spot natural gas prices are

expected to rise as imports from Norway will decrease.

Coal fell to their lowest level in

almost a decade as China's devaluation of its currency

triggered economic concerns over the economy of the world's

biggest coal consumer

German power slightly

rebounded from the almost 12-year low hit last week.

The French Cal' 16 contract is much less liquid.

Evolution of main energy products in the last 30 days

WEEKLY MARKET REVIEW WEEK 33, 2015

Market Intelligence Group www.energymarketprice.com

Natural gas

Distillates

Oil

3

-0.5%

-1.4%

-2.3%

-3.8%

-1.3%

-2.7%

-0.6%

-3.0%

6.0%

-6.5%

-8.9%

-1.9%

-5.9%

-6.6%

-8.7%

-19.4%

-14.7%

-25.0% -20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0%

Iberian power 2016

Italian power 2016

Nordic power 2016

UK power next season

Dutch power 2016

Belgian power 2016

French power 2016

German power 2016

CO2 (EUAs)

European coal

Iberian gas

UK gas (NBP)

Dutch gas (TTF)

Belgian gas (Zee)

Gas oil

Heavy fuel oil

Brent oil

Evolution Forecast

Aug. 14 453.6

Aug. 7 455.3

Stock EIA

-0.36%

405060708090

100110

OIL

Brent rose 0.9%, snapping a

string of six weekly losses, as the front-month September contract

approached expiration. Brent prices are well above the 2015

low of $45.19 from January, despite its recent slide.

WTI crude fell to a fresh 6-1/2-year low on Friday, posting a

seventh weekly loss. U.S. refinery outages dampened demand and bulging inventories

amplified concerns about a global supply glut. Data showing

North Dakota crude oil production rose a second straight

month in June, along with the stronger dollar and weaker-than-

expected consumer sentiment were also bearish for WTI crude.

Money managers cut their net long U.S. crude futures and

options positions to the lowest level since 2010.

Brent Oil

($/barrel)

EIA Stocks


Weekly Evolution

Weekly Evolution


mln bbl

4

Evolution Forecast

Aug. 14 49.03

Aug. 7 48.61

Brent Oil ($/barrel)

+0.86%

200

250

300

350

400

450

500

Stock EIA crude range (2004-2014) Stock EIA 2015

OIL

Oil structural price is a

theoretical EMP modeled price based on US refinery capacity,

crude runs, EIA crude stock levels and speculative

positions in crude oil at NYMEX.

EMP structural price recovers slightly

($/barrel)


Market Intelligence Group www.energymarketprice.com 5

0

20

40

60

80

100

120

140

160

180

Oil EMP Structural price EMP Structural price+speculation

OIL

Top global oil producers

Global Oil Production per Country



Non-OPEC production OPEC production

as of July 2015

In million barrels per day

6

1.69

1.78

2.00

2.40

3.37

2.60

2.70

2.80

2.69

3.80

4.77

4.59

9.90

10.79

15.10

0 5 10 15 20

KazakhstanNorwayNigeria

VenezuelaBrazil

KuwaitUAEIran

MexicoIraq

CanadaChina

Saudi ArabiaRussia

U.S. (50 States)

OPEC, 37.19

Rest of the world,

58.44

OIL

Global Demand and Supply, Inventories

end of period inventories, in

million of barrels

Global Demand and Supply, Inventories



in mbpd

7

50

52

54

56

58

60

62

64

66

0

500

1000

1500

2000

2500

3000

3500

U.S. Commercial Inventory OECD Commercial Inventory U.S. Forward Days Cover OECD Forward Days Cover

0.92

0.94

0.96

0.98

1

1.02

1.04

75

80

85

90

95

100

Demand Supply Supply/Demand

Evolution Forecast

Aug. 14 233

Aug. 7 243.5

HFO 3.5% ARA ($/ton)

-4.31%

DISTILLATES

Distillate prices rose in line with Brent oil.

Diesel barge differentials in northwest Europe slipped slightly

as the market remained well supplied, with high inventories

and more cargoes on the way from the U.S. Gulf Coast, the

Middle East and Russia. Refineries have been running hard to meet the demand for

gasoline but this has also boosted diesel stocks.

Product is also being kept in ARA because of low water levels along

the Rhine and Danube, which means that barges are restricted

to loading less than 50% of capacity.

Evolution of Gasoil in the last 30 days

Evolution of Heavy Fuel in the last 30 days


Weekly Evolution

Weekly Evolution


$/ton

8

450

480

510

540Gasoil

Evolution Forecast

Aug. 14 474.5

Aug. 7 467.5+1.49%

Gasoil ($/ton)

230

250

270

290

310Heavy Fuel Oil

$/ton

500

1500

2500

3500

4500Stock ARA Gasoil range (2004-2014) Stock ARA GOL 2015

DISTILLATES

HFO and Gasoil stocks above long-term

range

ARA stocks are volumes independently held in the

Amsterdam-Rotterdam-Antwerp hub

ARA gasoil stocks rose 5.8% last week, reaching a

new record high of 3.46 million tonnes.

ARA Gasoline stock levels are

also above the long term range.

(In kiloton)



(In kiloton)

(In kiloton)

9

0

500

1000

1500Stock ARA Heavy Fuel Oil range (2004-2014) Stock ARA HFO 2015

200400600800

100012001400

Stock ARA Gasoline range (2004-2014) Stock ARA Gasoline 2015

NATURAL GAS

Futures fell in most

European markets. Falling oil prices mean that oil-

indexed gas deliveries from Russia will get cheaper this

winter, raising expectations of continued high deliveries into

European gas markets.

Prompt prices are expected

to rise as imports from Norway will decrease due to planned

maintenance at Kollsnes processing plant, which treats

gas from the country’s largest gas field Troll. Demand in UK was

around 20% above the seasonal norm, largely due to high

demand from power plants. Asian LNG prices steadied for

September delivery as traders awaited the outcome of

purchase and supply tenders to signal price direction.

Evolution of Natural Gas Futures

(In EUR/MWh)

Evolution of Natural Gas Day-Ahead Market



(In EUR/MWh)

Weekly Evolution

Weekly Evolution

(In EUR/MWh)

(In EUR/MWh)

10

19.019.520.020.521.021.522.022.523.0

Gas ZEE Cal+1 Gas TTF Cal+1 Gas NBP Cal+1 Gas GASPOOL Cal+1 Gas SPA Cal+1

19.0

19.5

20.0

20.5

21.0

21.5

22.0

Gas ZEE DA Gas TTF DA Gas NBP DA Gas GASPOOL DA Gas PEG DA

Aug.

14 Aug. 7 Change Forecast

20.3 20.4 -0.44%

20.1 20.2 -0.74%

22.3 22.3 -0.25%

19.5 19.9 -1.71%

20.1 20.8 -3.79%

Gas TTF 2016

Gas NBP 2016

Gas GASPOOL 2016

Gas ZEE 2016

Gas SPAIN 2016

Last

week avg

Prev.

week avg Change

19.5 20.1 -3.01%

19.8 20.3 -2.31%

19.6 20.3 -3.61%

20.1 20.7 -3%

19.8 20.2 -2.39%

Gas ZEE DA

Gas TTF DA

Gas NBP DA

Gas GASPOOL DA

Gas PEG DA

NATURAL GAS

Natural Gas Oil Linked Price Components

303 – average daily prices of the period Q-1 applied to calculate the

price for the period Q

313 – average daily prices of the months M-2 to M-4 applied to

calculate the price for the period Q

603 – average daily prices of the months Q-1 and Q-2, applied to


703 – average daily prices of the months M-1 to M-7, applied to


101 - average daily prices of the month M-1 applied to calculate

the price for the period M

Q – quarter, M – month.

(In EUR/bbl)



(In EUR/ton)

(In EUR/ton)

Weekly Evolution Evolution of Brent components for gas prices in the last 30 days

Evolution of Gasoil components for gas prices in the last 30 days

Evolution of HFO components for gas prices in the last 30 days

11

46485052545658 Brent303 2014

Brent313 2014Brent603 2014Brent703 2014Brent101 2014

420435450465480495510525 GOL303 2014

GOL313 2014

GOL603 2014

GOL703 2014

GOL101 2014

230240250260270280290 LFO303 2014

LFO313 2014

LFO603 2014

LFO703 2014

LFO101 2014

Aug. 14 Aug. 7 Change Forecast

47.90 48.34 -0.9%

47.35 47.76 -0.87%

48.00 48.45 -0.92%

48.05 48.50 -0.92%

49.03 49.44 -0.84%

Brent303 2016

Brent313 2016

Brent603 2016

Brent703 2016

Brent101 2016


447.11 451.07 -0.87%

443.83 447.45 -0.8%

444.74 448.57 -0.85%

445.93 449.70 -0.83%

453.71 458.31 -1%

GOL313 2016

GOL603 2016

GOL703 2016

GOL101 2016

GOL303 2016


234.98 238.33 -1.4%

232.15 235.93 -1.6%

232.70 236.53 -1.61%

233.82 237.76 -1.65%

240.62 243.19 -1.05%

LFO303 2016

LFO313 2016

LFO603 2016

LFO703 2016

LFO101 2016

0

1

2

3

4

5

6

7

8

9

10

18

20

22

24

26

28

30

32

34

36

TTF gas Cal Y+1 Oil linked gas price Cal Y+1 Premium [Oil linked gas] - [ZEE TTF average]

NATURAL GAS

Oil linked natural gas premium down from 7 EUR/MWh in April

to under 3 EUR/MWh

Oil linked natural gas price

(EUR/MWh)



Evolution Forecast

Aug. 14 22.57

Aug. 7 22.74

Oil linked gas price Cal+Y1

-0.77%

NATURAL GAS

Gas storage in

Europe rose 2.7 points for the

week, reaching 65.9%.

Gas storage in Europe



Weekly Evolution

NBP

AUT

GER

FRA

BEL

NED

PSV

IBR

In billion cubic meters

Latest data

13

Aug.

14 Aug. 7 Change

53% 51% 2.42

62% 59% 2.54

65% 64% 1.46

76% 72% 3.33

67% 63% 3.74

81% 78% 2.68

82% 78% 3.09

37% 34% 2.5

PSV

THE NETHERLANDS

BELGIUM

AUSTRIA

GERMANY

IBERIAN

NBP

FRANCE

0.3

1.6

3.6

3.8

6.0

11.5

7.8

11.9

0.4

0.4

1.2

2.1

2.9

2.8

6.9

7.4

0 4 8 12 16 20

Belgium

The Netherlands

NBP

Iberian

France

Italy

Austria

Germany

Full capacity

Empty capacity

Evolution Forecast

Aug. 14 8.15

Aug. 7 7.79

CO2

+4.62%

COAL & CO2

Coal futures fell to their lowest

level in almost a decade as China's devaluation of its currency triggered

economic concerns over the economy of the world's biggest coal consumer. European API2 2016 coal

futures settled at their lowest level since November 2005, and

benchmark Chinese coal futures were also near record lows, last

settling at $51.10 a tonne. The price falls came as China's yuan hit

four-year lows, after authorities devalued the yuan in a move that

raised fears of a global currency war.

EU carbon prices rose 4.6% last

week. Germany sold 1.599 million spot EU carbon permits on EEX

at 8.15 EUR/t on August 14. Previously, EU countries sold

1.459 million carbon permits at 8.2 EUR/t on August 13.

Evolution of Coal Futures in the last 30 days

(In USD/ton)

Evolution of EU carbon prices in the last 30 days



(In EUR/ton)

Weekly Evolution

Weekly Evolution

14

53

54

55

56

57

58

59

Coal Cal+1, API N2, 6000 kCal NAR CIF, USD/tonne

Evolution Forecast

Aug. 14 53.95

Aug. 7 54.55

Coal Cal+1, API N2

-1.09%

7.2

7.4

7.6

7.8

8.0

8.2

8.4

CO2, in EUR/tonne

FREIGHT Aug. 14 Aug. 7 Change

RICHARD BAY -

ROTTERDAM 4.05 3.95 0.1

RICHARD BAY -

MEDITERRANEA

N

11.75 11.75 0

QUEENSLAND -

ROTTERDAM 7.65 7.8 -0.15

PUERTO BOLIVAR

- ROTTERDAM 4.85 4.8 0.05

MARACAIBO -

ROTTERDAM 13.49 12.4 1.09

HR - ROTTERDAM 5.45 5.5 -0.05

US GULF OF

MEXICO - ARA 9.5 9.8 -0.3

COAL

Chinese demand for overseas shipments has

already been waning as its

economy grows at its slowest pace in decades and

the government tries to reign in on rampant

pollution, to which coal

contributes heavily. The country's coal imports

over the first half of the year were down 37.5% over

the same period last year.

Global physical coal trade, futures and freight



Weekly Evolution

(In USD/ton)

1

2 3

4

5

6

7

8

9

1

2

3

4

9

8 6

7

5

10

10

Physical trade

Futures

Forward Coal Trends

15

52

54

56

58

60

EEX Month Ahead Richards Bay Month Ahead

10.6549.851.954.156.1

59.256.356.356.42

62.0061.10

68.0574.00

70.6067.80

0 50

US Western Month AheadColombia

Russia BalticMaputo South Africa

Richard Bay South AfricaNewcastle Australia

Richards Bay Month AheadRotterdam Month Ahead

EEX Month AheadVenezuela

Russia EasternKalimantan Indonesia

PolandChina

Newcastle Australia - Japan

ELECTRICITY

Power prices for delivery

next year rose 0.8% in Germany and 0.3% in the Netherlands,

but fell 0.9% in France and 0.3% in Belgium and UK. German

Cal16 slightly rebounded from the almost 12-year low hit last

week. The French Cal' 16 contract is much less liquid.

Spot power prices rose

at the end of last week, as a sharp drop in supplies of

German renewable energy offset lower electricity demand brought on by cooler weather.

However, the picture turns bearish as temperatures are

expected to drop significantly, reducing the need for air-

conditioning. On the supply side, five French nuclear reactors,

representing 6,200 MW of capacity, were expected to restart over the weekend.

Electricity forward prices across Europe

(EUR/MWh)



Evolution

16

20

25

30

35

40

45

50

55

60

65

70

Belgium Netherlands Germany France

Great Britain Nordic Pool Spain Italy

Last

quotation

Cal+1 bsld

Last 20

days

average Change

UK 62.69 63.29 -0.60%

Belgium 45.80 46.00 -0.20%

Italy 48.20 48.48 -0.28%

Spain 47.90 47.95 -0.05%

Hungary 40.50 40.55 -0.05%

Netherlands 38.25 38.16 0.09%

France 39.40 39.62 -0.22%

Germany 31.15 31.33 -0.18%

Austria 31.15 31.33 -0.18%

Czech Rep. 30.80 31.10 -0.30%

Nordic 25.65 25.52 0.13%

ELECTRICITY

Historical range Electricity forward prices

(EUR/MWh)



Evolution of electricity forward prices for delivery

next year since 2007

17

30

40

50

60

70

80

90

100

110

120

Belgium Netherlands Germany France Spain UK

ELECTRICITY

Spreads represent the

theoretical net income of a power plant from selling a

unit of electricity, after buying the fuel required to

produce this unit.

Spark spread = natural gas.

Dark spread = coal.

Clean spreads = required number of carbon

allowances also deducted.



Power premiums Spark Spreads

Clean Spark Spreads

Dark Spreads

Dark Clean Spreads

18

-15

-10

-5

0

5

10

German spark spread 2016French spark spread 2016Belgian spark spread 2016

Aug. 14 Aug. 7 Change

DE/FR -20.94% -22.26% +1.32%

BE/FR 16.24% 15.55% +0.69%

BE/NL 19.74% 20.39% -0.65%

DE/NL -18.56% -19.00% +0.44%

DE/BE -31.99% -32.72% +0.73%

12

17

22

27

32

German dark spread 2016French dark spread 2016Belgian dark spread 2016

-20

-15

-10

-5

0

5

German clean spark spread 2016French clean spark spread 2016Belgian clean spark spread 2016

5

10

15

20

25

German clean dark spread 2016French coal spread 2016Belgian coal spread 2016

FOCUS WEEKLY MARKET REVIEW WEEK 33, 2015


Global coal price benchmarks facing

overhaul

19

The global thermal coal industry is facing the biggest shake up of its pricing benchmarks after Argus and IHS McCloskey, the dominant price providers, proposed changes to their assessments.

The world's top three coal indices, which help inform short and long-term deals struck between coal producers,

traders and end-users, are all under review.

Earlier this year, price spikes in South Africa's Richard's Bay and Australia's Newcastle markets caused concern that prices could be higher than fundamentals justified. Traders said at the time there had been some high bids placed at short notice which few sellers could meet.

As the market is not particularly liquid, bids and offers help inform pricing on the indices.

In response to the concerns, consultations have drawn feedback on proposed changes to the API 2 benchmark for northern European coal markets and the API 4 South

African coal benchmark, the worlds' first and third largest coal indices.

The indices are calculated using data gathered by Argus and IHS McCloskey.

The consultations by Argus and IHS McCloskey, which ended last week, proposed narrowing the window for price assessments which provide the basis for the API indexes from around three months to around two months from Sept. 1.

Both Argus and IHS McCloskey said they were reviewing responses to their proposals.

"We've identified that there could be ways to look at the assessment window and amend the methodology that will help

with liquidity, so we have gone down the path of this consultation," said John Howland, senior director of coal at IHS Energy, which owns IHS McCloskey.

A spokeswoman for Argus said: "In our discussions with the industry, questions and suggestions had come up around changing the date range specification of some of our coal assessments.“

Trading platform globalCOAL is also discussing narrowing the three-month timeframe used for prices on its Newcastle benchmark index with market members, although it has not launched a formal consultation, said Chief Executive Eoghan Cunningham.

Source: Reuters

ECONOMICS

European stocks

had their worst week in six, falling 2.9 %, as shares of

exporting companies with exposure to China fell after the

yuan was devalued. Economic growth in the euro

zone slowed in the second quarter as France stagnated

and Italy lost momentum, held back by an uncertain global

outlook that is weakening investment even in

powerhouse Germany.

U.S. stock indexes ended higher on the week, however, mostly on the strength of big

gains on Monday.

Evolution of Dow Jones Industrial Average Index

Evolution of FTSEurofirst 300 Index



Weekly Evolution

Weekly Evolution

20

17200

17400

17600

17800

18000

18200

Dow Jones Industrial Average Index

Evolution Forecast

Aug. 14 17477.4

Aug. 7 17373.4

Dow Jones

+0.59%

1450

1500

1550

1600

1650

FTSEurofirst 300 Index

Evolution Forecast

Aug. 14 1528.15

Aug. 7 1574.37

FTSEurofirst 300

Index

-2.93%

RATES

Exchange Rates

The dollar came under pressure last week as

China's devaluation curbed expectations the

Federal Reserve's long-awaited interest rate

increase would come as early as its Sept. 16-17

meeting. But strong U.S. retail sales

data and good industrial production data backed

the view that the Fed was ready to hike.



Weekly Evolution EUR/USD

GBP/USD

GBP/EUR

EUR/NOK

21

1.06

1.07

1.08

1.09

1.10

1.11

1.12

EUR/USD

1.371.381.391.401.411.421.431.441.45

GBP/EUR

1.54

1.55

1.55

1.56

1.56

1.57

1.57

GBP/USD

8.7

8.8

8.9

9.0

9.1

9.2

EUR/NOK

Aug. 14 Aug. 7 Change

EUR/USD 1.1107 1.0972 +1.23%

GBP/USD 1.5648 1.5498 +0.96%

GBP/EUR 1.4088 1.4125 -0.25%

EUR/NOK 9.1375 9.0410 +1.06%

Contact Us

Dirk Wouters +32 478 557176 [email protected]

Stéphane Querinjean +32 478 301981

[email protected]

Rue du Rhône 5 CH-1920 Martigny

Tel. +41 (0)22 534 97 99 Fax:+41 (0)22 594 81 17

www.energymarketprice.com

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