Czech Energy Pricing Trends - 18 May 2021

CO2 price (Dec-21) increased by 4,55 EUR/t WoW to level 54,49 EUR/t WoW and hit this week again new historical maximum. Today CO2 grew again and is trading above 55,00 EUR/MWh level. CO2 continues to test its historical maximums. However, the price increases are not primarily driven by market fundamentals. Brent price (Jul21) decreased by 1,04 USD/bbl WoW to 67,05 USD/bbl. Brent price is trading today around 68,00 level. Coal API (Jun21) increased significantly by 4,7 USD/t WoW to 86,8 USD/t, and today is trading around 86,00 level.

The electricity market was driven by bullish CO2, increasing gas and coal prices. The heating season has not yet finished in some parts of Europe, but temperatures forecasted for the end of May and 1st half of June are forecasted to be close to the average. Rainy weather in central and SE Europe shall support hydro generation and could push SPOT prices lower in this region.

Slovenian market followed trend on other European markets and increased significantly as well.

The near-curve market grew significantly WoW. Very strong SPOT prices, along with summer gas, pushed the winter prices up as well. Thanks to winter price 21/22 growth, Cal 22 price grew significantly as well. Further products (Cal 23/24) increased as well, but less than Cal 22. Lower than expected LNG imports into Europe (because of high LNG prices in Asia) means expected lowest gas-in-storage levels in Europe since last six years in this part of the storage season. Gas prices are further supported by high CO2 price, which supports gas-to-power generation as well as strong coal prices. Some relief could bring higher inflation data from USA and Europe which could affect the monetary stimulus of central banks.

Forecasted close-to-average temperatures in coming weeks and rainy weather in some parts of Europe could support hydrogeneration and decrease power demand for air conditioning. However, the latest events in the world are still not supportive of a more profound decline in commodity markets.

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Miroslav Ceman

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