July 2019: Monthly contracts up 12% MoM; Euro Gas volumes double YoY; prices up
Monthly contracts traded in July were up 12% vs June, to 9.225 million monthly contracts traded. All commodity groupings recorded month on month growth, with all bar UK Gas growing 10% or over MoM. YTD 2019 monthly contracts traded are up 22% vs. YTD 2018.
MoM growth in July is a seasonal anomaly, as July is a traditionally slow summer month. This is the first July since 2014 to show a monthly increase in volumes. Prices also showed a rebound through July, with increasing volatility in the gas markets.
July in Gas saw fascinating market dynamics with rising volatile prices driving volume growth, combined with a continued move in market structure. Euro Gas saw a 12% increase in volumes traded vs. June up to over 4,000 TWh. This is almost double the size of July 2018, demonstrating significant year on year growth, and pushing YTD volumes up 50% vs last year. All commodities except PSV, Gaspool and France Hubs saw MoM growth. TTF reached its second highest volume on record, after March’s 3,831 TWh.. UK Gas volumes were also up 9% vs June, but YTD are down 14%.
Prices also rebounded through July, showing the first uptick after several months of decline. The LEBA day ahead one month volatility for TTF increased to 88% in July, the highest recorded volatility since March 2018. Amongst these volume, price and volatility increases, we saw a further move towards the cleared market, with overall Euro & UK Gas cleared volumes gaining 3% share vs June to end the month at 44% market share.
July Euro Power volumes were up 15% vs June, while UK Power volumes were up 13%. YTD Euro Power volumes are down 4%, with UK Power volumes up 3%. All commodities except Nordic Power and CEE Power saw volume increases month on month. Prices followed gas during July, with all regions except Italy and Spain showing a rebound after several months of decline. The cleared market moved the other way in Power though, with broker bilateral gaining 1% share to 47% in July.
Coal volumes were up 10% month on month vs. June, but they are down 4% YTD 2019 vs YTD 2018. API2 grew 12% month on month while API4 saw a 15% contraction in volumes. Things don’t really seem to be getting any better for the coal markets in terms of volumes. Prices did pick up in July after a long period of decline, as the API2 front month price rose 19% vs. June.
Emissions saw the largest month on month growth of all commodities, up 18% vs June and building on the growth seen last month. EUA Dec-19 prices have been up for the last two months in a row, with July beating the record set in April. During July, EUAs were trading very close to €30. This is a stark contrast to this time two years ago where prices were close to €5. The impact of policy change to limit supply of units into the market has been significant.
This month we have included Spanish PVB for the first time. We have one month of data so this commodity is not included in the Euro Gas grouping, as we need 24 months of data to include a commodity in the grouping. Any questions on this please let us know.