November 2017: Gas drives MoM growth, French Power supply constraints linger and Coal continues shift to exchange execution.
What a start to December it has been with a gas explosion at Baumgarten gas facility and the North Sea crack likely to drive trading activity in the normally subdued last month of the year. December promises to bring an interesting report, not only our annual summary and discussion on Mifid II market dynamics but also due to the market activity itself. Now back to our November overview.
Total monthly contracts traded across all covered energy markets were up 11.4% MoM to 7.855m contracts traded. As with last month, Gas markets are driving the growth as Power, Coal and Emissions all remain relatively flat. With total YTD volume at 76,219m contracts traded, YoY volumes have ramped up from their slow start to the year and are now only down 8.7% vs. YTD 2016.
NBP, TTF, NCG and France Hubs all saw large MoM increases while the remaining commodities all saw MoM declines. NBP saw monthly volume increase 13% MoM to 1,510 TWh. This was not enough to keep up with TTF who saw its third largest monthly volume on record (since Jan-11), up 232 TWh to end the month with 144% of NBPs monthly volume. This is the largest difference between these two contracts since Nov-16. NCG had the largest MoM percentage increase for Nov-17, up 32% to 170 TWh.
Power markets however were down 30% YoY as a group. This time last year we were talking about the volatility and surge in volume driven largely by supply constraints in French Power spilling over into surrounding countries. While France is currently feeling the price effect of supply constraints again, the impact of their reactor maintenance issues has reduced and the effects contained within their borders. This is evident with French Power seeing a 15% increase in MoM volume while the surrounding interconnected countries all saw a MoM decline.
French Power is not the only interesting Power commodity this month. CEE Power has continued to grow throughout the year and is the only Power commodity we cover to see volume growth across all metrics (MoM, YTD and YoY). Its consistent growth has pushed it up past Italian Power to be the fifth most traded contract by volume YTD. Although, this is not all down to CEE’s success as Italian Power has seen a 34% decline YTD volume traded. While Spanish Power saw a big volume shift to broker bilateral, up 12% to 44% of total volume. This is the highest bilateral market share seen since April-15.
Coal markets continue to move towards exchange executed as API2 saw its highest and API4 its second highest exchange executed market share. This furthers ICE as the dominant player, accounting for 80% of total volume traded in Nov-17. This dominance is helped by API2, where ICE is most prevalent, seeing a 9% increase in MoM volume.