Order Adven’s Energy Outlook report

The energy market is changing rapidly and becoming more and more complex. At Adven, we are working with these questions every day.

As the leading partner in the energy transition, we want to help you navigate in this fast-moving environment.

The market is currently very volatile. We talk about an energy crisis that at a first glance seems to be abating, but the underlying causes are far from resolved.

Therefore, once every quarter, we consolidate a report – the Energy Outlook – with some of the main factors impacting the energy market right now as we see it. In the Outlook we discuss, for example, the energy crisis in more detail, take a glance on Nordic power and how the fuel market is developing in terms of fuel source and prices. In this constantly changing environment we also suggest some hedging strategies to limit the risks in financial assets.

Energy Outlook topics

  • Executive summary
  • Changing theme
  • Energy markets: Nordic Power, natural gas, biomass, coal, carbon etc.
  • Hedging strategies
  • Market prices
  • Price forecast Nordic Power

Summary of the newest Energy Outlook #5 published at the end of November 2023

The heating season is at our doorstep. Following a summer with slower market movements, gas and coal prices are gradually gaining seasonal momentum. So far this year, energy supply fears are significant lower compared to a year ago: cargoes of liquified natural gas have been rather easy to source on global markets and European gas storages are full, much thanks to a mild previous winter.

But despite the recent drop in prices, current price levels are still above historical averages and the risk premium on gas is significant. The loss of Russian supply has exposed Europe’s physical short gas position to global markets while tightening global gas supply overall. This is fundamentally increasing the unpredictability of energy in both price and volume, elevating risks in the whole energy system. Another important factor is the high price of emission allowances. Supported by recent political reforms, the price has not dropped as much as in other energy commodities.

While Europe is struggling to replace lost energy imports from Russia, new trade flows are emerging, and substitute fuels are pulled into by supply squeeze. This is a stress test of volume and price risk management for all participants, with gas, coal, biomass, emissions all being in for the ride.

During this summer, fuel and power prices have leveled out far below last year’s peaks. But despite the price-drop, current levels are still significantly above historical averages.

The two main reasons for this are high costs of emission allowances following recent years’ reforms, and significant fuel risk premiums due to the ongoing supply squeeze. Europe’s shift in gas sourcing is significant. Pipeline gas flows to Europe is expected to be 62 percent lower compared to 2019 while LNG imports could be 119 percent higher. This is fundamentally increasing unpredictability of gas in both price and volume, elevating the risks in the whole energy system.

As Europe is struggling to replace lost energy imports from Russia, new trade flows are emerging, and substitute fuels are being pulled into the supply squeeze. This is a stress test of the volume and price risk management for all participants, with gas, coal, biomass, carbon prices all being in for the ride.

The winter was a more manageable challenge than was feared last autumn. Being the second mildest winter in Europe on record, energy consumption plummeted.

And so did prices, but current energy price levels are still much elevated compared to historical averages. On top of this, the record-breaking mild weather is underlying an even longer-lasting crisis than the energy one. Emission pricing has a strong momentum which is increasing the cost of fossil fuels. And with the recent reforms, even more participants are starting to acknowledge this fact.

As Europe is struggling to replace lost energy imports from Russia, new trade flows are emerging, and substitute fuels are being pulled into the supply squeeze. This is a stress test of volume and price risk management for the whole energy complex, with gas, coal, biomass, carbon prices all being more or less caught in the storm.

The second winter of the energy crisis is more than half-way through. Even though the crisis at first glance seems to be abating, the underlying causes are far from resolved.

Relations with Russia have not improved but quite the opposite, as Europe has increased its support to Ukraine. All the while, the political risks continue to be significant with several political interventions in place and several more likely to be introduced. In December, the details of the Fit for 55 reform packages were decided upon by the EU, expanding and tightening the emission trading system.

Electricity prices have come down significantly since the record price-spike in August. The reason is a combination of mild winter weather and economic slowdown, that is weighing on coal-, gas-, biomass-, and carbon prices. But despite the recent drop, energy prices remain much elevated compared to their historical averages.

The applicable hedging strategies remain very much focused on risk management.

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You will receive the outlook within two working days from order. The report is free-of-charge for you.

A new issue of the Energy Outlook is published quarterly. The order is not subscription-based, you need to order each issue separately. You can also order already published issues retrospectively, mention the number in the order form.

The next issue of Energy Outlook is to be released in the beginning of 2024.

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