Czech Energy Pricing Trends - 17 Dec. 2021

CO2 price (Dec-21) increased by 4,57 EUR/t WoW to level 84,77 EUR/t WoW. Today market fell and is trading below 80 level now. Brent price (Feb22) increased by 0,6 USD/bbl WoW to 75,02 USD/bbl. Today market fell and is trading below 74 level now.  Coal API (Jan22) increased by 21 USD/t WoW to 154 USD/t. Today coal is trading sideways. CO2 continued to have bullish development. The expectation was that key price movements on CO2 take place before the expiration of option contracts on December 15. However, today´s price decline indicates otherwise.  The electricity price increased significantly, especially on near-curve market. The electricity market followed the gas market, which increased significantly as reaction to colder weather forecast and risk related to gas flows from Russia. Yesterday's price hike was mainly related to EDF’s decision to shut down two French reactors due to the discovery of cracks on piping at another similar sized unit. The debate about nuclear energy and emission allowances, led by European Union leaders at the Brussels summit, ended yesterday without an agreement. The group of states including Czech Republic are in opposition to states (GE, AT, LUX) traditionally opposing nuclear power.

Slovak power market followed the trend of Czech market.

Slovenian market followed trend on other European electricity markets.

SPOT reached historical maximum 136 EUR/MWh, mainly as reaction to fears related to future gas flows from Russia.

Gas market was experiencing significant price increase since beginning of this week supported by the sentiment and weather forecast.

The main reason for price increase appears to have come from weather forecast which indicates below-average temperatures from next week to end of January.  The gas flows remained quite stable during this week; however, the gas market is sensitive to any news which could lead to any flows decrease/interruptions. Some market participants see significant risk related to cold weather forecasted for western Russia. The gas market remained bullish despite higher LNG imports. The most affected are near-curve products (Month and Quarter). Another factor may also be closing open positions of large energy consumers (those who waited till end of year). Gas level in European gas storages decreased by 3,14% WoW (as of Wednesday) to level 61,05%.

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Miroslav Ceman

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