2017 Integrated Report – Departure into a new era

Energy markets were supported by sound economic performance

The central hedging policy of DB Group aims to minimize energy price fluctuations. Our activities are therefore not exposed to the full impact of changes in market prices.

Tug-of-war over OPEC production cuts affects the price of oil

Brent crude (USD/bbl)

2017

2016

Change

absolute

%

Average price

54.7

45.1

+9.6

+21.3

Highest price

67.1

57.9

Lowest price

44.4

27.1

Year-end price

66.9

56.8

+10.1

+17.8

Source: Thomson Reuters

  • The oil market in 2017 was especially affected by declines in supply due to production cuts by members of the Organization of Petroleum Exporting Countries (OPEC).
  • Uncertainties due to geopolitical developments were another contributory factor – balanced, however, by higher oil production in the USA, due partly to measures taken by the new US government to facilitate production.
  • Libya, Nigeria and Brazil reported significant production increases.
  • Market performance was strengthened by transactions by speculative financial investors. Most of the momentum on the demand side stemmed from Asia, particularly India and China.

Electricity and coal markets closely correlated

Base load power (following year) (€/MWh)

2017

2016

Change

absolute

%

Average price

32.4

26.6

+5.8

+21.8

Highest price

38.4

35.8

Lowest price

28.0

20.7

Year-end price

37.2

31.4

+5.8

+18.5

Source: Thomson Reuters

  • Price swings in the German electricity spot market, which were sometimes extreme, were due to the volatile supply of renewable energies and to supply shortages in connection with security concerns at French nuclear power stations.
  • Higher coal prices and uncertainties about Germany’s future energy policy raised prices on the futures market.
  • Issue trading prices rose on the whole, affected by discussions about the possible design of the reform of the fourth trading period (2021 – 2030) and the possible consequences of Brexit.