EU Power Pricing Trends | 19 March 2021
After carbon led European power prices higher throughout the first half of last week, the trend was reversed when the resurgence of COVID-19 across Europe forced the extension of lockdown measures into April. The deteriorating health and macroeconomic situation weighed on power contracts, key feedstocks and carbon. Additional pressure was leant to short-end pricing amid forecasts of warmer and windier weather. A pattern of mild and wet weather slowed the drain on Nordic hydro reserves, nevertheless, total reserves ultimately fell 2.6% week-on-week and, with less rainfall forecast for the week ahead, the system price climbed by over 2%.
EU Natural Gas Pricing Trends | 19 March 2021
The European gas supply dynamic continued to strengthen last week: LNG imports were up 20% week-on-week, rising to the highest level in over a year, while Russian flows held strong. Average temperatures were up on average across northwest Europe tempering physical demand, while a healthy LNG schedule met with forecasts of warmer weather to weigh on short-end futures. However, offsetting the fundamentals were EUAs, which climbed to fresh highs in midweek. However, carbon’s late-week slump, as well as further weakness in benchmark oil futures and the macroeconomic landscape, saw both short-end and annual contracts close the week in the red.
EU Energy Complex | 19 March 2021
Oil futures slumped last week, setting the tone for the wider energy market. Brent crude closed the week down almost 7% as further lockdowns and a slow vaccine rollout in Europe dented demand forecasts. While demand in China and India remains robust, the renewed restrictions in Europe pulled the rug out from underneath oil prices, which were largely supported by optimism surrounding the vaccine rollout and the global economy recovery. Carbon EUAs twice reached record prices last week, the latter on Thursday - where an intraday price of €43.74/tonne was recorded. Continued speculative activity and compliance buying ahead of the April deadline supported pricing. However, EUAs dropped nearly €2/tonne from Thursday’s record into the weekend as milder temperature outlooks met news of the virus resurgence.
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