EU Energy Pricing Trends - 11 Dec. 2020


European forward year power contracts extended their recent gains last week, as an overwhelmingly bullish energy complex offset weak economic data and risks of further lockdowns restrictions. Mainland nations saw their 2021 calendar year power futures rally with surging gas, coal and carbon prices.

Natural Gas

A slower LNG schedule for northwest Europe, driven by rallying Asian spot LNG prices, tightened European gas fundamentals last week. LNG arrivals into the region fell over 20% week-on-week, triggering gains in futures on major gas hubs. Demand-side factors supported pricing further, with the relative profitability of gas-fired power generation rising amid rallying coal and carbon pricing.

Energy Complex

The benchmark December-20 EUA surged throughout Thursday’s trading session, eventually closing at a record high of €30.90/tonne, as EU leaders met to decide on the bloc’s 2030 emissions reduction target. Early on Friday, leaders agreed to increase the reduction target from its current 40% of 1990 levels, to 55%.

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