Prices unless otherwise stated are for the close of April 18. 2012 baseload German power: €57.86/MWh, down 1.51% 2012 CIF ARA coal: €128.78/t, down 0.78% Front-month UK natural gas: GBp58.50/therm, up 1.40% EU emission allowances (EUAs) for December 2011 delivery: €16.82/t, up 0.90% Certified Emission Reduction(s) (CERs) for December 2011 delivery: €13.02/t, up 1.32% Brent crude oil futures for front-month 2010 delivery: US$122.75/bbl, up 1.2%, as of 10:00 GMT, April 20 WTI crude oil futures for front-month 2010 delivery: US$109.69/bbl, up 1.4%, as of 10:00 GMT, April 20 Latest buzz US sweet light crude for May delivery rose by US¢82, or 0.8%, to settle at US$107.94/bbl on the NYMEX on Tuesday, with a weaker dollar and a stronger performance from equities allowing crude to recover some of the ground lost on Monday from Standard & Poor’s warning over US debt. ICE Brent crude for May delivery rose by US¢12, or 0.1% to finish at US$121.73/bbl. Also providing bullish sentiment was post-election rioting in Nigeria following the elections at the weekend, which killed at least 33 people. The American Petroleum Institute has reported that US crude oil inventories rose by 667,000bbl in the week ended April 15, compared to the 1.6mbbl expected by a Platts survey. Bank of America Merrill Lynch in its latest Global Energy Weekly has warned that: “some pockets of oil demand weakness are emerging,” with “a number of industries and countries already struggling under high oil, as suggested by the rapid drop in airline utilisation rates. Also, the spike in oil prices is translating into weaker US retail sales.” However, the BoAML analysts went on to say that “In sum, the time is not yet ripe for oil demand destruction and we maintain our view that Brent oil will average US$122/bbl this quarter, with prices temporarily breaking through $140/bbl in the next three months. However, with the first signs of demand destruction on the horizon and credit risks on the rise, we keep our view that Brent will average $95/bbl in 4Q11.” Natural gas futures rose on the back of unseasonable heat in the south and forecasts suggesting that the hot weather will persist through to April 28. Natural gas for May delivery rose by US¢12.4, or 3%, to settle at US$4.262/mBtu on the NYMEX, the largest gain in a single session since March 25. In addition, open interest in natural gas futures rose to an all-time high on Monday, according to preliminary bulletin posted on the CME Group website. Open interest rose by 13,786 contracts to a record 993,196, up from the previous record of 982,208, set on March 1, 2011. The Commodity Weather Group has predicted that the warm temperatures will spread along the East Coast and into New York and New England by the end of the month. In a note to clients, Shiyang Wang, an analyst at Barclays Capital said that: “The South is expected to experience one of the hottest Aprils in history, which should generate incremental increases in power loads.” According to Bloomberg data, scheduled natural gas deliveries to power plants rose by 4.2% on Monday to 14.1bnft3, the highest level since February 10. Qatar’s LNG production rose to 21.8Mt in March, but LNG imports to the US are expected to drop to 1.05bnft3pd, down from the 1.18bnft3pd seen a year ago, according to EIA projections. Dubai is currently considering whether to become a gas hub through the development of LNG export terminals, according to Paul Manson, manager of the Dubai Supply Authority (Dusup). Dusup has already built a floating receiving facility for LNG imports and is converting a depleted offshore oil field into an undersea gas storage facility. Over in the UK, the National Grid has said that the country’s energy supplies are looking comfortable for the summer months and relatively high natural gas prices are set to make coal the fuel of choice for power generation. A shift of GB10p/therm or US$20/t for coal would be enough to reverse this trend. The National grid adds that modern, high-efficiency gas-fired power plants are still profitable at current fuel prices. It also warns that Japan’s increased need for LNG could mean less for the UK. However, analysts suggest that the large rise in Qatari LNG output should mean that as much LNG lands in Europe this year as it did in 2010. That said, the closure of Libya’s Greenstream pipeline into southern Italy is working to tighten the European gas market. Vietnam Coal Mineral Industries Group has announced that it will boost its coal sales in April to 4.6Mt, with 2.15Mt available for export. It also expects to sell 13.3Mt in 2Q11, with both positive developments due to higher coal prices. The Dec11 EUA contract began trading on Monday by rising from its previous close, but a weak 2012 German baseload power contract forced it down to around €16.55/t. However, in the last two hours of trade, it rose thanks to a recovery in oil prices and sentiment among traders that EUA contracts had become oversold. As a result, the Dec11 EUA contract rose to settle at €16.82/t, up 0.90% from the previous close and €0.02 short of its intraday high. Emmanuel Fages and Carine Hemery of Orbeo believe that carbon prices probably won’t move beyond €17.25/t this week and put this week’s minimum price at around €16.50/t. CERs took direction from EUAs but advanced more strongly with the Dec11 and Dec12 contracts rising by 1.32% and 1.34%, respectively. The Dec11 and Dec12 CER-EUA spreads narrowed as result, finishing the day at -€3.80 and -€4.77, respectively. Activity was restricted to the Dec11 and Dec12 contracts, with the former responsible for 64% of activity.

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