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General news

  • According to data from McKinsey Energy Insights (MEI), global carbon dioxide emissions will plateau by 2030 thanks to a global shift to EVs and renewable generation.
  • Speaking at a UK-France summit French president Emmanuel Macron insisted that the City of London and its financial services would not be granted “special access” to the EU single market and that if Britain’s financial services industry wanted to access the single market it would have to contribute to the budget and acknowledge European jurisdiction. He went on to say that if Britain did not want to apply EU market rules then it would be offered a deal more similar to the one which Canada has.
  • The House of Lords’ EU Energy and Environment Sub-Committee is urging the government to provide clarity on the UK’s future waste policy, flagging concerns about the impact Brexit might have on waste policy and trading.
  • UK ministers have warned that 3 out of every 5 new cars need to be electric by 2030 and that new homes need to be built to a higher standard in order for the UK to meet its GHG targets.

Agriculture

  • China is likely to see its farming costs rise this year as a result of a jump in fertiliser and pesticide prices, which are up 17.1% compared to a year ago as a result of higher raw material prices and slowing operational rates.
  • Dairy prices are rising at their fastest rate in 14 months following increasing concerns about New Zealand output as a result of weather setbacks, which threatens output from the world’s top milk-exporting country.
  • The European Parliament has voted to phase out the use of palm oil in biofuels by 2021, with biofuels made from other food and feed crops not exceeding 7% of all transport fuel.
  • There are concerns that the cold, dry conditions that have settled over the US will have damaged some Kansas Winter Wheat. Kansas normally grows around a fifth of all wheat grown in the US, half of which is exported.
  • Soybean prices have hit a 5-year high on the CBoT as a result of strong demand and concerns over dry weather in Argentina, which has led to the Buenos Aires Grain Exchange saying last week that it may reduce its 2017/18 planting area estimate following sowing delays in the northwest of the country. Front-month CBoT soybean contract is currently trading at $9.84-1/2 a bushel.

Metals

  • A database of valuable materials that are available for recovery from scrap vehicles, old batteries and waste electrical equipment has been created. The database is called the Urban Mine Platform and it tracks flows of precious materials whether they are in use or at the end-of-life stage.
  • As concerns grow about the use of child labour in the mining of cobalt, investment manager Hermes has warned that car manufacturers and technology companies need to do more to ensure they can trace where their supplies come from.
  • Precious metal prices benefited last week from the weaker USD with platinum surging to a record $1,140 a troy ounce and gold trading at a 4-month high. These metals are priced in USD and so become cheaper for foreign buyers to buy.
  • Platinum prices have been boosted by growing demand as consumers shift away from diesels to petrol cars, in which platinum is a catalyst.
  • Data from the National Bureau of Statistics shows that Chinese aluminium output increased in December to its highest in 6 months following the launch of state-owned Chi Nalco’s new capacity. China produced 2.71m tonnes of metal last month, 15.3% up from the previous month.
  • London copper prices have edged up from the $7,000 a tonne level thanks to positive sentiment amongst Japanese manufacturers, a pick-up in global manufacturing growth and a resilient Chinese property market.

Energy - UK 

UK Energy Markets*
Expiry Month EoD Price MoM Change 21 Day MA 21 Day Vol.
Baseload - Front Month Feb-18 49.84 - 6.49 53.28 6.26%
Baseload - Front Quarter Jun-18 44.64 - 0.55 45.54 2.40%
Baseload - Front Season Sep-18 44.07 - 0.09 44.65 2.44%
Peakload - Front Month Feb-18 54.64 - 7.15 58.61 5.76%
Peakload - Front Quarter Jun-18 47.73 - 1.09 48.87 2.54%
Peakload - Front Season Sep-18 47.49 - 0.18 48.10 2.27%
NBP - Front Month Feb-18 50.13 - 9.35 54.92 9.17%
NBP - Front Quarter Jun-18 44.00 - 1.69 45.65 4.36%
NBP - Front Season Sep-18 43.51 - 0.99 44.81 3.94%
  • The UK’s Big Six energy suppliers were all ranked amongst the 10 worst-scoring firms for customer satisfaction in a survey of almost 9,000 customers by Which?. The survey found smaller suppliers, in particular Opus Energy achieved the best satisfaction ratings.
  • A new report from the University of Manchester has ranked shale gas as one of the least sustainable and green options for producing electricity with wind and solar being the greenest options. The report noted that in order to become the most sustainable fracking would need to reduce its environmental impacts by 329-fold and increase employment 6-fold.
  • UK wind power generation topped 10GW for the first time last week according to Drax Electricity Insights, which recorded a high of 13.5GW.
  • Shell has signed a Power Purchase Agreement (PPA) making it the only receiver of energy from British Solar Renewable’s (BSR), one of the UK’s largest solar power plants.

Energy - International

Oil

  • Shell has approved the redevelopment of the Penguin Field, located north-east of the Shetland Islands, in conjunction with ExxonMobil.
    • The project is expected to cost over $1bn and is Shell’s first significant development in the North Sea in over six years.
    • It is viewed by many as a sign that major oil and gas companies are still on the hunt for opportunities in the North Sea which is one of the world’s most mature oil and gas basins.
  • The energy sector continues to focus on the EV revolution and the tightening of rules regarding global emissions and the impact these will have on the demand for oil.
    • BP’s chief economist is however challenging the industry to not focus on when peak oil demand will happen, but instead what the ramifications will be of this on the economies of the world’s largest oil producing countries.
    • Spencer Dale urged leaders to consider the consequences of the industry ending up in structural decline in “preparation” for a slow down in demand and what this could ultimately mean for oil prices.
  • Saudi Arabia’s energy minister has announced that the world’s oil producers are in agreement that they should continue to work with each other on controlling production even after the supply cut deal expires at the end of the year. What this cooperation will look like beyond the end of the OPEC-led cuts has however not yet been defined.
  • Schlumberger is predicting a positive outlook for 2018 following its Q4 2017 earnings were better than analysts had forecast. The world’s largest oilfield services group believes that weaknesses in the oil industry following 3-years of downturn could lead to further tightening of the market.

Other

  • The International Renewable Energy Agency (IRENA) anticipates renewable energy being cheaper than fossil fuels by 2020 thanks to rising investments in clean power projects which will cut costs for this energy for customers.
  • Trafigura has signed a 15-year agreement with Cheniere Energy, a US LNG group.
    • The agreement is to buy 1m tonnes per annum of LNG and is the first long-term flexible deal between an independent commodities trader and a US producer.
    • This agreement compares to LNG contracts which have traditionally tended to lock in buyers via clauses limiting the resale of the supplies.
  • Defying analysts’ expectations, coking coal prices are being supported above $220 a tonne by engineering problems, wet weather and port congestion in Australia, which has led exporter BHP Billiton and producer Whitehaven Coal to cut their export and production forecasts, respectively.

 

*The table below summarises the expiry month, end-of-day (EoD) price, month-on-month (MoM) change, monthly moving average (MA) and 21-day volatility (Vol.) for the UK's electricity and gas front month/quarter/season prices (based on closing price on 19/01/18).