(Montel) Europe’s front-quarter coal contract breached USD 100/t on Wednesday to hit a fresh six-year high, despite a sell-off among other commodities on fears of an escalating trade war between the world’s two largest economies.
API 2 coal for fourth quarter delivery last traded at USD 100.15/t, up USD 0.80 day on day. It has climbed 9% since 22 June.
The front month breached USD 100/t on Monday, and was last seen up USD 0.80 day on day at USD 102.20/t, its highest level since early 2012.
The 2019 contract was still USD 0.10 off its highest level this year – it was at USD 93.50/t, up USD 0.56 day on day.
Analysts attributed the ongoing gains to strong Asian demand coupled with pressures on supply.
“The most important thing remains weather for now,” said Diana Bacila at Norwegian analysis firmNena.
Above average temperatures, especially in China, had fuelled electricity demand for air conditioning even as unseasonal rain in Indonesia and strikes in Australia had disrupted exports from the region’s major suppliers, she said.
Improving hydropower production in China and India, as well as rising coal inventories among Chinese utilities suggested the uptrend in prices might be approaching its end, she added.
Oil retreats
Among other fuels, oil retreated after the US published a list of Chinese goods worth USD 200bn it would hit with further tariffs.
Brent crude last traded down USD 1.45 at USD 77.41/bbl.
Earlier, Brent dipped as low as USD 76.76/t as it pulled away from the USD 80/bbl mark it has challenged in recent weeks.
A potential softening of the US attitude towards Iranian oil exports – after Washington reimposed sanctions on Tehran – was adding to a fall in prices, said analysts at Commerzbank.
“Apparently the US is considering exemptions to oil imports from Iran, with a ‘handful’ of countries having made such requests,” the bank said in a note.
In addition, the US Energy Information Administration has revised up its outlook for US oil production next year and forecasts it will produce nearly 12m bbl/day by the end of 2019.
Gas prices were following the trend in oil, said Craig Lowrey at Cornwall Insight.
The front-year contract on the Dutch TTF hub, Europe’s most liquid, was down EUR 0.28 at EUR 21.15/MWh, while the day ahead was down EUR 0.15 at EUR 22.63/MWh.
By contrast, carbon continued to push out recent gains. The benchmark Dec18 contract was up EUR 0.32 at EUR 16.37/t. Earlier it touched EUR 16.53/t, its strongest level in a month.
Reporting by:
Nathan Witkop
nathan@montelnews.com
17:32, Wednesday, 11 July 2018