Energy Product Derivatives - Europe

Europe

The nominal value in the Energy Product Derivatives market is projected to reach US$8.47tn in 2024.
It is expected to show an annual growth rate (CAGR 2024-2029) of 4.37% resulting in a projected total amount of US$10.49tn by 2029.
The average price per contract in the Energy Product Derivatives market amounts to US$0.01 in 2024.
From a global comparison perspective it is shown that the highest nominal value is reached in the United States (US$26,910.00bn in 2024).
In the Energy Product Derivatives market, the number of contracts is expected to amount to 559.60m by 2029.

Market

Region

Region comparison

Currency

Analyst Opinion

The Energy Product Derivatives market in Europe is experiencing a surge in interest and activity, driven by various factors shaping the market dynamics.

Customer preferences: Customers in Europe are increasingly turning to Energy Product Derivatives as a way to hedge against volatility in energy prices and manage risk in their portfolios. With the growing awareness of the importance of risk management, market participants are seeking out these financial instruments to protect their investments and optimize their exposure to energy markets.

Trends in the market: In countries like Germany and the United Kingdom, there is a notable trend towards the use of Energy Product Derivatives to speculate on future energy price movements. Traders and investors are leveraging these derivatives to capitalize on price fluctuations and generate profits in the dynamic energy markets. Moreover, the market is witnessing a rise in the trading volume of options and futures contracts, indicating a growing appetite for sophisticated financial instruments.

Local special circumstances: Certain countries in Europe, such as Norway and the Netherlands, have unique energy market structures that influence the demand for Energy Product Derivatives. For instance, Norway's significant reliance on hydropower and the Netherlands' position as a natural gas hub create specific opportunities and challenges for market participants. As a result, the use of derivatives in these countries is tailored to address the specific characteristics of their energy markets.

Underlying macroeconomic factors: The overall economic environment in Europe, including factors like interest rates, inflation, and geopolitical events, plays a significant role in shaping the Energy Product Derivatives market. Economic uncertainties and policy decisions impact energy prices and market sentiment, driving the demand for derivatives as a risk management tool. Additionally, regulatory changes and initiatives to promote sustainability and renewable energy sources are influencing the development of new derivative products in response to evolving market needs.

Methodology

Data coverage:

Figures are based on commodity derivatives, their notional value, the number of contracts traded, the open interest (outstanding contracts at the end of a year), and the average value of a contract.

Modeling approach / Market size:

Market sizes are determined by a Bottom-Up approach, based on a specific rationale for each market segment. As a basis for evaluating markets, we use market research & analysis, and data of World Bank, as well as the World Federation of Exchanges. Furthermore, we use relevant key market indicators and data from country-specific associations and national data bureaus such as GDP, wealth per capita, and the online banking penetration rate. This data helps us to estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the particular market. In this market, we use the HOLT-damped Trend method to forecast future development. The main drivers are GDP per capita an the online banking penetration rate.

Additional Notes:

The market is updated twice per year in case market dynamics change.