Commodity Market Report
Europe energy prices long-term outlook H2 2018
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*Please note that this report only includes an Excel data file if this is indicated in "What's included" below
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.
Table of contents
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Oil Prices
- Demand growth, geopolitical risk outweigh robust supply
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Gas Prices
- Rising European demand to compete with Asia
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Coal Prices
- China reform and two contradictory stressors
- The outlook for coal prices
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Power Prices
- Decarbonisation reshapes wholesale power markets
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Increased renewable supply rains on the fortunes of gas and coal
- Higher input costs support rising power prices in the early 2020s
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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:
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Oil price forecastGlobal gas price forecastCoal price forecast - delivered (CFR) ARA prices (6,000 kcal/kg NAR)
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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
What's included
This report contains:
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