Energy market analysis
Why energy market analyses are necessary
Interview with Dr Nicole Nulsch, Team Leader Market Analysis at VNG Handel & Vertrieb GmbH
The majority of VNG Handel & Vertrieb’s customers are based in Germany. Is it really important for a municipal utility in Saxony to know how many LNG tankers are currently on their way to Asia or whether nuclear power plants in France are being shut down due to low water levels?
Dr Nicole Nulsch: Today’s energy market is global, and prices – such as for natural gas – are very much determined by the overall international situation. Every company that trades energy or uses it for manufacturing should therefore keep a very close eye on price developments, even if they are happening on the other side of the world. LNG tankers, for example, are sent in the spot market (short-term procurement) to the location where the prices are highest (taking transport costs into account). So if the prices at the European trading points are attractive for LNG tankers, additional LNG volumes enter the market and in turn influence the price. Low water levels in France and the shutdown of French nuclear power plants lead in turn to increased electricity generation from natural gas, which in the past has usually resulted in a price increase.
"Observing price developments and assessing the relevant factors helps us better understand the energy markets, and the gas market in particular, so that we can make the best possible decisions when it comes to energy procurement."
Dr Nicole Nulsch: You should always familiarise yourself with the market conditions before making a purchase decision. If, for example, an industrial company invites tenders to cover all of its energy needs and is aiming for a fixed contract price, the timing of the invitation to tender and conclusion of the contract will determine the price level of the contract to a large extent. Trading points are characterised by high price volatility. Observing price developments and assessing the relevant factors helps us better understand the energy markets, and the gas market in particular, so that we can make the best possible decisions when it comes to energy procurement. Of course, we cannot foresee every possible development. In the face of unexpected events, we swiftly and comprehensively assess the situation. Leveraging our years of experience in the gas market, we develop potential scenarios for future price developments and provide these insights to our customers.
When should companies with high energy requirements start looking at the energy markets?
How can the customers of VNG Handel & Vertrieb GmbH find out about the latest developments on the energy markets if they do not have their own in-house analysts?
Dr Nicole Nulsch: We have a number of options available for customers of ours who are in that situation. We have been offering the VNG Market Report for many years, which our customers can obtain via the VNG business portal on a daily, weekly or monthly basis, depending on their requirements. The report provides an overview of price developments at the most important trading points.
To understand the current gas and energy price development in detail, we also offer the VNG Analyst Call. Every 14 days, our analysts explain key factors and developments and analyse their impact on the spot and futures markets using detailed charts and graphs as part of the 45-60-minute live call. Storage levels, gas flows to Europe and Germany, geopolitical events and factors which affect demand (such as the weather and electricity generation) are also included in the analysis. By participating in the analyst call, our customers gain a detailed insight into developments on the energy market and can draw appropriate conclusions for their own procurement and portfolio management on this basis.
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