Europe energy prices long-term outlook: H1 2020

Our H1 2020 European energy price outlook incorporates the long-term impact of coronavirus across Europe’s key commodities. In this update, the post-pandemic world is uncertain and results in greater price and volume risks to Europe’s energy markets. • The demand impact on oil from coronavirus is felt for the next decade, but oil supply is affected for far longer due to the devastating impact of the oil price collapse • Spot gas prices in Europe have hit record lows, exacerbated by the coronavirus outbreak removing further demand from the already over-supplied global market. Price upside over the next two years is limited • Benchmark coal prices hit historic lows amid pandemic lockdowns and extended coal-to-gas switching risk. ARA CFR pricing has been sensitive to gas and carbon prices amid increasingly dynamic coal-gas competition • Carbon prices initially followed other commodities lower as widespread lockdowns hit, but soon recovered, supporting fuel switching in the power sector