U.K. power benchmarks pushed higher last week, climbing for the third consecutive week, in line with headline grabbing gains in oil and carbon EUAs, as well as a sharp jump in U.K. and European gas prices. The Dec-20 benchmark EUA future recorded its highest ever closing price on Thursday, after surging around €1/tonne throughout the trading session.
A mixture of supply and demand-side dynamics lifted U.K. gas prices substantially last week. On the demand side, rallying European carbon and coal prices increased the relative profitability of natural gas for power generation. On the supply-side, surging north Asian LNG prices saw more vessels heading for the region; sparking fears amongst European traders that the recent recovery in the European LNG delivery schedule was short-lived.
The December-20 benchmark carbon EUA recorded its highest ever closing price last week – €30.90/tonne – as EU leaders met to negotiate the bloc’s 2030 carbon emissions target. A deal was reached, after talks went through the night on Thursday, to target an emissions cut of 55% of 1990 levels by 2030. Carbon EUA prices held at near-record levels into the end of the week, with the Emissions Trading Scheme the best tool at the European Commission’s disposal to decarbonise the private sector.
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