In the day-ahead market on JEPX (Japan Electric Power Exchange), the 24-hour spot power prices on a weekly average basis for Jul 29-Aug 2 delivery eased back from the previous week in East Japan (50Hz), but stretched rises in West Japan (60Hz). The temperatures exceeded the extremely hot day indicator of 35 degrees from Kyushu to Kanto throughout the week. Despite robust demand for air-conditioning, spot prices posted a conflicting trend between East Japan and West Japan. Several players echoed, "The difference in power configuration between East Japan and West Japan cannot explain the West's current superiority over the East. A source at a power producer and supplier noted, "The prices may have reflected a gap of coverage ratios with bilateral OTC deals between East Japan and West Japan." Especially from 16:00 hours onward when photovoltaic generation starts to slow down, West Japan significantly outperformed East Japan. The average price during 16:00-22:00 hours posted a spread of more than Yen 10 between Tokyo and Kansai from Aug 1 onward.

In Tokyo and Kansai, the key areas in East Japan and West Japan, the 24-hour average posted a difference in favor of the East by Yen 2.63 for Jul 29 delivery, Yen 0.08 for Jul 30 delivery and Yen 1.22 for Jul 31 delivery. But the East-West spread flipped into a reverse pattern in favor of the West by Yen 2.85 for Aug 1 delivery and Yen 2.64 for Aug 2 delivery.

In the fuel markets, LNG and coal prices gained ground from the end of the previous week. But crude oil prices turned lower.

DES Northeast Asia spot LNG prices hovered in the high $12 level per mmBtu for prompt September 2024 arrival as of Aug 1, up about 70cts from the end of the previous week (Jul 26). European natural gas prices gained ground, and the LNG market in Northeast Asia also followed suit. LNG prices also found support from growing gas demand for air-conditoning amid ongoing high temperatures in Northeast Asia. The Ministry of Economy, Trade and Industry (METI) announced on Jul 31 that Japan's LNG inventories for power generation stood at 2.15 mil mt as of Jul 28, down 200,000mt from the previous week. The level was up from 1.94 mil mt as of end-July last year, but down from the average of past five years at 2.19 mil mt.

FOB Newcastle thermal coal prices in Australia stood around $144 per ton for August 2024 loading as of Aug 1. The level was up about $5 from the end of the previous week, tracking a gain in gas prices.

In the crude oil market, WTI crude for September 2024 stood in the high $76 level as of the morning on Aug 2 while Brent crude for October 2024 was trading at slightly above $80. Both WTI and Brent were down about 30cts from the end of the previous week. Crude futures came under pressure from alleviated tensions in the Middle East and concerns over shrinking demand in China. But geopolitical risk in the Midde East were renewed after Ismail Haniyah, political leader of the Islamist group Hamas, was killed by an Israeli strike. Furthermore, weekly inventory data released on Wednesday by the US Energy Information Administration (EIA) showed that crude inventories fell 3.4 mil barrels and gasoline stocks declined by 3.7 mil barrels in the week ended on Jul 26. The drawdowns of both crude and gasoline stocks were larger than market forecasts. Following the data, crude oil prices regained upward momentum, paring the loss from the previous week.

The actual highest price during the week was at Yen 35.64 in West Japan for Jul 30-Aug 2 delivery. Meanwhile, the actual lowest price during the week was at Yen 0.01 in Tohoku for Jul 29 delivery, and Hokkaido and Tohoku for Jul 30 delivery.

By area, the weekly average of the 24-hour spot prices was at Yen 12.59 in Hokkaido, down Yen 1.62 from the previous week, Yen 11.24 in Tohoku, down Yen 2.25, Yen 17.35 in Tokyo, down Yen 0.38, Yen 18.27 in Chubu, up Yen 0.72, Yen 18.15 in Hokuriku and Kansai, up Yen 0.77, Yen 18.10 in Chugoku, up Yen 0.71, Yen 19.62 in Shikoku, up Yen 1.79, and Yen 14.69 in Kyushu, down Yen 1.14. Shikoku marked the highest among nine areas following the previous week, but an increasing number players voiced skepticism over Shikoku's outstanding strength.

In the JEPX auction, volumes of offers were 1,197.96 mil kWh on a weekly average basis, up 5.3% from the previous week. Meanwhile, bids on a weekly average basis waned by 0.8% to 1,131.30 mil kWh. The weekly average of trade volumes increased marginally by 0.1% to 848.87 mil kWh.

Power demand in nine areas of Japan during Jul 29-Aug 2 was a combined 14,789.18 mil kWh, up 0.7% from 14,685.22 mil kWh during Jul 22-26. The figure was up 2.2% from the corresponding period a year earlier. Demand during Jul 31-Aug 4, 2023 after day of week adjustment was 14,471.00 mil kWh.

In the JEPX forward market, no deals were confirmed during Jul 29-Aug 2.

Deals reported on TOCOM (Tokyo Commodity Exchange) during Jul 29-Aug 2 were as below.

Deals reported on EEX (European Energy Exchange) during Jul 29-Aug 2 were as below.

In the second week of August, spot prices are likely to soften albeit moderately from the first week. Summer heat is expected to ease a bit, and especially Tokyo will escape from extremely hot days at 35 degrees. In West Japan, the temperatures are forecast to keep 35 degrees throughout the week, but will not go far beyond 35 degrees unlike the first week. In Tokyo, meanwhile, JERA launched commercial operation at the 780MW new No1 unit at its Goi LNG-fired power station starting Aug 1. On top of that, JERA is scheduled to restart the 1,000MW No1 unit at its Higashi Ohgishima LNG-fired power station on Aug 7 after completing regular maintenance started Mar 7. The buildup in power supply is believed to curb any hikes in spot prices.