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Market Dynamics Report

September was a month of increasing volumes and prices across the board as every Power, Gas and Coal commodity (except PSV) posted their highest month end price for the year to date. Volatility was up, particularly in the power markets – UK Power volatility as measured by LEBA was 814% during September (vs. 113% in August), and French Power prices were volatile in the last week of the month. Total market share was fairly stable for the month, with broker bilateral steady at 59%, while the cleared market shifted 1% to broker cleared at the expense of exchange executions.

Monthly contracts traded increased 31% vs. August 2016 to 7.657 million. YTD Sep-16 monthly contracts traded are 67.652 million, up 18% vs YTD Sep-15. The Euro Power grouping was the greatest contributor to the monthly volume change, with volumes up 76% MoM to 1.562m monthly contracts traded, contributing 38% of the overall volume growth. Euro Gas was next in line, with volumes up 18% MoM and contributing 30% of the overall volume growth. UK Power saw a 70% increase in volume MoM, to hit the largest monthly volume seen since we began reporting, at 152 TWh traded. Even with such a stellar volume month, UK Power's small relative size means it contributed just 5% of the volume growth for the month. UK Gas, Coal and Emissions were up 19%, 24% and 60% respectively, contributing 14%, 3% and 10% of the overall volume growth for the month.

The power markets had an interesting month as fundamentals pushed prices around in a big way – UK Power posted some of the highest and lowest prices it has seen due to changeable wind power generation and consumer demand from day to day, while supply concerns related to EDF's planned nuclear plant outages in France moved French Power prices up sharply in the last week of the month. API2, a key fuel for European Power generation, closed the month at $70.75, a level not seen since 2014. As described earlier, UK Power had a record volume month, while every power market included in the Euro Power grouping saw double digit volume growth September 2016 vs. August 2016. French Power volumes saw the largest change, up 124% vs. August, with Spanish Power next in line with volumes up 109% vs. August. UK Power market share shifted back to the brokers, with broker bilateral gaining 6% to 90% share at the expense of exchange executions. The Euro Power grouping market share was relatively stable, with broker bilateral even at 48% and broker cleared gaining 2% at the expense of exchange executions.

The gas markets also saw volume increases across the board: PSV up the most at 63% MoM, with France Hubs next at 38%, Gaspool at 34% and Zeebrugge at 32%. NBP and TTF were up 19% and 17% respectively. PSV was the only market to post a decline in price for the month, down 1% vs. August. Meanwhile all other markets posted double digit price growth. What were the drivers for the gas price movements this month? Were they related to the moves in power at all? Oil prices moved up again this month – how much correlation remains between gas prices and oil prices as a result of oil-indexed long term gas contracts? Why did PSV prices buck the trend? Broker bilateral gained 5% share in UK Gas, to end the month at 52%, taking 4% from exchange executions and 1% from broker cleared. The Euro Gas grouping saw a 2% gain in broker bilateral share, to 78%, as both broker cleared and exchange executed lost 1% share each.

Last month we mentioned that we would be changing the volume calculations for ICE Power and Gas volumes. We are currently developing a methodology consultation process which we expect to be implemented from January 2017. We are putting a hold on any methodology changes until this process is implemented. As such we are waiting until this methodology consultation process is in place to make this change to ICE volume calculations.

Downloadable Content

File:
Euro Commodities Report

Downloadable Content

File:
Euro Commodities Report