Power: Futures were rising for the second consecutive day on Thursday – with the December contract hitting a one-month high – amid a colder, drier weather outlook, strong carbon and high spot prices.
The strong spot price during the week, above our current position on Q1-19, we got blown out of our position to start at 47.55 EUR/MWh, which was taken by trailing stop from low during the period of the open position. All in all, a profit of 35 cents/MWh, not as expected, but with our long term view, our strategy was working.
During the time of holding the position, we were at most in the money around 2.4 Euro, but for Minter Markets, we are given a long term view and will not trade the position during our holding period. But, with customers holding the position, it has given many signals of closing the position, to re-open the next trading day or waiting for new signals.
With current weather forecast, colder and drier, the spot price is going to be strong to mid-December. How high the market will go until that time, we have to wait and see. But, knowing this, the market is also watching, trying to be smart. I would still recommend January 2019 as a short position with values, today trading above 50 EUR/MWh.
With slow start on the winter and spot price below 50 EUR/MWh, I still believe the start of January will deliver below, the question now is how high it could go… So, at time being, wait until Monday / Tuesday and cross our fingers for continuing bullish weather pattern, will bring good prices to sell, long is not an option for me.
Oil: Still struggling on this, all technical signals are bearish, the market is well supplied and the feeling of a short when we are in an over-sold area, will never be a case for me. But, doing a bet on oil, I believe the range is going to settle between 70 – 80 for next weeks to come and it is going to be a market that will go in no direction and best case settle around the 75 level.
Watching the level on January and February, it is trading around 72 USD/bbl. To manage a position to reach 75 USD/bbl, our stop loss could not be higher than 1 USD. So, to conclude, watch the market, try to reach a long position around 71 – 71.50 USD/bbl, set 1 USD as stop loss and target to reach 75 USD/bbl.
Arguments would be that the market will show big support around the 70 level, it is not fundamental, just pure human behavior that believe that is a good area to test a long position.
To add on some bullish signals, the European gas prices rose across the board on Thursday amid unplanned outages in the Norwegian system that were cutting flows by more than 100mcm/day. The outages, higher power and carbon prices, making gas plants more competitive, which is also lifting the marginal cost.
|Ticker||Date Opened||Entry Price||Stop||Target Price||Current Price|
Visit our Position Tracker to look at all of our realized trades and proven track record: http://www.mintermarkets.com/position-tracker/
– Morten T