Name: Europe energy prices long-term outlook H2 2018
Brand: Wood Mackenzie
SKU: 104402
Price: 4000 USD
Availability: OnlineOnly
Author: Wood Mackenzie

Commodity Market Report 14 February 2019

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Report summary

Oil prices have strengthened marginally compared to our previous view. We expect prices to remain below $70/bbl for 2019/2020, but then move to sustained rises on demand growth. The gas market continues to have a less pronounced oversupply than previously anticipated and, with it, a more modest and shorter market rebalancing between 2019 and 2021. Later, Asian LNG competition will see prices rising. Current high coal prices are forecast to slowly recede to marginal cost levels as Chinese protectionist policy weakens seaborne demand and new Australian and Indonesian supply slowly enters the market. Power prices now remain above the previous view to the early 2020s and will not go under 2017 levels at any time over the remainder of the forecast. Rising fuel and carbon costs will then see power prices rise. In Europe's carbon market, we expect ETS prices to be higher than our previous outlook until the mid-2020s, before falling a little below the earlier projection in later years.

Oil Prices
- Demand growth, geopolitical risk outweigh robust supply
Gas Prices
- Rising European demand to compete with Asia
Coal Prices
- China reform and two contradictory stressors
- The outlook for coal prices
Power Prices
- Decarbonisation reshapes wholesale power markets
Increased renewable supply rains on the fortunes of gas and coal
- Higher input costs support rising power prices in the early 2020s
ETS Carbon Prices
- Recent market trends
- Energy policy development and strengthening of the ETS
- 2030 targets confirmed
- The long-term role of EU emissions trading
- Emissions (EUA) prices
- Carbon (EUA) price forecast

Tables and charts

This report includes the following images and tables:

Oil price forecastGlobal gas price forecastCoal price forecast - delivered (CFR) ARA prices (6,000 kcal/kg NAR)

Base load power prices by marketClean spark spreads (left) and clean dark spreads (right) (low efficiency)Carbon (EUA) price and fuel switching cost in powerGDP growth