EU Power Pricing Trends | 12 February 2021
Another record-breaking week for carbon EUAs wasn’t enough to spare annual forward contracts from a week-on-week loss. Instead, prices were guided lower by falling gas pricing and concern around the slow vaccine rollout. European power prices even shrugged off a strong week for European equities and further gains in oil benchmarks. Icy weather in the north of the continent saw another weekly drain on Nordic hydrological balances which, despite forecast for more rainfall in the days ahead, saw the 2022 ‘system price’ jump by nearly 6% week-on-week.
EU Natural Gas Pricing Trends | 12 February 2021
Europe’s benchmark ‘month-ahead’ contracts dropped markedly last week – most prominently in the U.K., where the front-month NBP future shaved 7%. Prices were pressured lower by a 166% week-on-week climb in daily LNG imports to northwest Europe – the largest week-on-week rise since March 2018. Moreover, there was a return to more familiar temperatures and levels of wind, which tempered physical gas demand. Carbon continued to limit any downside on gas however, with speculative trading activity pushing EUAs to above €40/tonne for the first time.
EU Energy Complex | 12 February 2021
It was another headline-grabbing week in the European carbon market last week. Speculators continued to fuel carbon’s rally and the December-21 benchmark traded above €40/tonne for the first time in midweek. However, the EUA benchmark tumbled 6.6% in the opening 21 minutes of Friday’s European trading session, in response to the a Bloomberg report suggesting the EU is, once again, considering intervention to limit speculation in the EUA market. However, bets that such intervention would never arrive, or would ultimately be ineffectual, saw the December-21 benchmark pare all losses and close the week above €40/tonne. Gains in global equity benchmarks helped to push crude oil prices higher, yet the primary driver remains the pattern of tighter global supplies, led by OPEC+ and the group’s ongoing commitment to output limits.
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