EU Power Pricing Trends | 4 June 2021
A 30% week-on-week increase in UK wind productivity, albeit from a low base, failed to provide any substantial pressure to spot power prices last week - despite a 40% lift in temperatures easing average total power demand. Declines in short-dated contracts were instead limited by higher prices at the near-end of the gas curve. Notably, however, the level of backwardation across the power curve steepened further last week due to the more prominent decreases in longer-dated contracts - weighted further by a near 6% drop in the price of carbon UKAs and price weakness in longer-dated gas contracts.
EU Natural Gas Pricing Trends | 4 June 2021
Britain's storage reinjection effort picked up pace last week as above seasonal average temperatures saw heating demand drop almost 40% week-on-week. In spite of this, the near doubling in gas stocks, to over 20% of total medium-term storage capacity, was not enough to abate fears of supply tightness. Planned maintenance at key Norwegian facilities continued to cap Norwegian flows as pipeline supply fell 15% week-on-week. Conversely, Britain’s LNG outlook for June, when compared historically, looked fairly robust for the time of year – despite the Asian JKM benchmark continuing to trade at a premium to European hub prices.
EU Energy Complex | 4 June 2021
Market movements were largely mixed last week as elevated carbon prices, low storage levels, capped gas flows and higher front-month coal prices opposed the bearish pressure of demand reduction from warmer temperatures. Britain’s second carbon auction saw the permits clear at £44.75/tonne (~€52) on Wednesday, identical to the price cap that will be put in place if the three-month average price of UKAs exceeds that level. Meanwhile, Brent gained support last week, primarily on OPECs cautious approach to output return and deferred expectations of a renewed nuclear deal with Iran which, if made, would lift U.S. sanctions on Iranian oil.
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