EU Power Pricing Trends | 5 February 2021
Annual power benchmarks surged in price last week as carbon EUAs rallied more than 15% week-on-week to record highs amid a burst of speculative trading activity. Rising carbon and colder weather forecast also lifted annual gas contracts, which further supported corresponding power futures across the continent. Cold weather in the Nordics saw power demand in the area surge to a record high on Thursday morning, and forecasts for more icy weather continued to support the region-wide annual system-price, with the market eyeing the region’s deteriorating hydrological balances.
EU Natural Gas Pricing Trends | 5 February 2021
The recovery in European LNG imports and more stable weather weighed on European gas pricing early in the week, before rallying oil and carbon prices grabbed headlines and shifted sentiment. Forecast for colder weather, as well as rising U.S. gas prices, also supported European gas contracts into the end of the week. U.S. gas futures climbed the most since August on forecasts for colder weather across much of the country; threatening to limit gas volumes available to export to Europe in the coming weeks.
EU Energy Complex | 5 February 2021
A rise in speculative bets on the future price of carbon EUAs saw Europe’s benchmark tradable emissions permit surge to record highs last week, trading within touching distance of €40/tonne. The rally began on Tuesday on the back of a Bloomberg article titled, “London Hedge Funds are Betting a $100 Carbon Price is Almost Here”, and extended into the end of the week. Record carbon prices also saw Europe’s benchmark coal future tumble as power generators look to use cleaner alternatives in the weeks and months ahead. Alongside carbon, global oil benchmarks pushed to the their highest level for over a year. Stronger prices were primarily driven by ongoing output cuts from major producers, which has seen global storage levels fall.
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