EU Power Pricing Trends | 28 May 2021
European annual power prices moved lower last week as carbon EUAs continued their descent. Although the declines in carbon were relatively muted compared with the week before, they were enough to prevent gains in oil, gas and coal from lifting annual power prices higher across the continent. Dry weather in the Nordics threatened to erase a surplus in the region’s hydrological balances, with forecasters expecting a deficit to emerge within 5 weeks. As a result, Nordic power prices pushed higher on the week.
EU Natural Gas Pricing Trends | 28 May 2021
The rate of gas reinjection slowed last week as maintenance fueled a further drop in southbound pipeline flows from Norway. Nevertheless, Russian flows were robust and LNG imports physically increased. Yet, the supply-demand outlook was enough to send gas prices higher week-on-week. The outlook for arriving tankers became less healthy amid a substantial Asia-Europe LNG premium and, despite above-average temperatures expected for much of June, the warm weather was forecast to arrive alongside low winds. Further supporting European benchmark gas prices were gains in oil and coal. Higher oil prices affected the parity between the free-floating European benchmark hub prices and oil-indexed gas from north Africa, while higher coal prices supported the relative economics of gas- fired power generation.
EU Energy Complex | 28 May 2021
After a strong start to the week, EUAs trickled lower throughout large parts of last week. Pressure on prices came from waning speculative demand, with a leading carbon Exchange Traded Fund (ETFs) losing $10 million in market capitalisation. Further pressure arguably was provided by surging coal prices, pushing European generators towards gas – a less carbon-intensive fossil fuel. Export issues in Colombia as well as robust demand from China and India fueled the gains in annual coal benchmarks, sending them to a two-year high, while a positive demand outlook and the imminent meeting of OPEC+ leaders was enough to send oil prices higher into the weekend.
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