EU Energy Pricing Trends - 26 Feb. 2021

EU Power Pricing Trends | 26 February 2021

Falling gas prices headlined the European power market narrative last week. Yet rising coal and oil prices, as well as still-strong carbon prices, limited losses in the annual contracts – French and German annual futures ultimately held gains from the previous week. Warmer weather in the Nordic region weighed on the system-price, with thawing ice promising to boost the region’s hydrological balances. Additionally, stronger winds forecast will allow hydroelectric generators to hold back reserves for later in the year, further weighing on power prices.

EU Natural Gas Pricing Trends | 26 February 2021

Short-end gas futures across western Europe sunk last week, with the largest declines coming in the French market. Pressuring futures was, chiefly, a strong return of LNG imports, the lack of which having contributed to skyrocketing prices in early January. LNG imports averaged over 100 million cubic meters per day between the 20th and 26th of February; double the average daily imports in the final week of January. 100 million cubic meters per day did, however, constitute a week-on-week fall of 17%. Nevertheless, with 11 tankers expected at the region’s terminals in the first week of March, the week-on-week fall in physical imports was not enough to relieve the pressure on prices.

EU Energy Complex | 26 February 2021

Carbon EUAs traded between technical support and resistance levels last week, with speculators unwilling to push prices higher following the noises from the EU regarding position limits. Additionally, auction demand failed to provide the same bullish support it was responsible for in weeks past, with auctions settling within €0.20/tonne of the secondary market. There remains much speculation regarding a sharp increase in EUA prices, although much of it will remain theoretical until June of this year, by which time, save for any delays, the EU will have proposed revisions to major policy instruments to deliver additional emissions reductions – instruments including the EU ETS.

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Charlie Strange

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