Czech Energy Pricing Trends - 16 Apr. 2021

CO2 price (Dec-21) increased by 0,68 EUR/t WoW to level 44,16 EUR/t WoW and today was trading slightly below 45,00 EUR/MWh. Brent price (Jun21) increased by 3,74 USD/bbl WoW to 66,94 USD/bbl. Today price was hovering around 67,00 level. Coal API (June21) increased significantly by 4,7 USD/t WoW to 72,35 USD/t and today was trading above 74,00 level. The entire energy mix is in very bullish sentiment. The main factors are strong economic data from the U.S. and a new revision of weather forecast for April and May for northwestern Europe. The new revision predicts colder weather towards the end of April and at the beginning of May. Lower renewables generation forecasted for the beginning of next week pushed the price of electricity for May much higher WoW. Strengthened oil and coal markets, along with very bullish sentiment on financial markets, pushed electricity (and CO2) prices up again.

Near-curve market trades are already above 21,00 EUR/MWh level. They are primarily affected by the latest revision of the weather forecast (colder) towards the end of April and the beginning of May. SPOT market is trading today almost at 22,00 EUR/MWh (Czech VTP). This weather re-forecast is all bullish news for the gas market and is postponing refilling empty European gas storages later towards the summer. Therefore gas for summer is at very high levels - above 20,00 EUR/MWh - and due to very low summer/winter spread close to winter 2021/2022 prices. So far, LNG imports into Europe still look good, and the possibility of North Stream II opening later this year could bring gas prices down. But as long as such high optimism (or rather inflationary expectations) remains on financial and stock markets, commodities (and raw materials) will follow.

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Miroslav Ceman

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