EU Power Pricing Trends | 26 March 2021
The potential disruption to global energy supply chains posed by a historic blocking of the Suez Canal by one the world’s largest container ships was reflected in annual European power contracts last week. European power tracked benchmark gas futures higher as the threat to LNG imports was priced in, while a third consecutive weekly gain in European coal benchmarks further supported the bullish narrative. Tempering the rally throughout the week were carbon EUAs which continued to lose ground following the record-setting week of mid March. Nevertheless, a bounce back in EUAs on Friday made sure that European power prices closed the week in the green.
EU Natural Gas Pricing Trends | 26 March 2021
European gas prices rallied substantially last week as the blockage at the Suez Canal in Egypt threatened the continuity of Europe’s healthy LNG schedule. The effects of the hold-up began to show over the weekend, when daily LNG imports into northwest Europe fell to a two-week low. Despite a general increase in average temperatures across Western Europe, aggregate storage levels fell amid a lacklustre week for renewable power generation and the slowing of LNG imports. Forecasts for below-average temperatures throughout early April rounded off a decidedly bullish gas market narrative, with short-term contracts posting the most significant gains.
EU Energy Complex | 26 March 2021
European coal prices were squeezed higher last week amid the disruption on the Suez Canal, in addition to the ongoing support of strong Indian power generator demand and flood damage in Australia’s coal exporting regions. Despite more than two million barrels of oil flowing through the Canal on a good day, Brent crude failed to post a weekly gain amid the disruption as the market kept one eye on both the developing situation in Europe, with governments scrambling to contain the latest coronavirus outbreak, and swelling U.S. crude stockpiles. Carbon EUAs slipped to below €40/tonne for the first time since early March amid the deteriorating macroeconomic outlook. However, a late-week rally in global stock markets filtered through into European carbon and EUAs pared most of the week’s losses to close the week just marginally in the red.
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