UK Energy Pricing Trends - 12 Mar. 2021

UK Power Pricing Trends | 12 March 2021

U.K. power contracts surged higher last week, led by carbon EUAs which rallied to new, record levels. With the first U.K. Emission Trading Scheme auction some two months away on May 19th, EUAs remain the U.K.’s benchmark carbon price. An outlook of cool weather and low winds further supported short-end pricing, particularly as the weather dynamic lifted near-end NBP gas futures. The spot market did fall significantly, however, as average, daily wind-turbine output more than doubled week-on-week.

UK Natural Gas Pricing Trends | 12 March 2021

U.K. gas storage sites took stock last week, revealing that U.K. storage levels had fallen to a 2-year low following the previous week’s collapse in wind-generated power. Temperatures remained below historic averages throughout the week, drawing additional volumes from storage sites. Nevertheless, supplies were decidedly robust throughout the week, with flows from Norway increasing week-on-week and average LNG imports into European terminals rising nearly 20%. Prices rallied significantly week-on-week, however, as carbon EUAs pushed past €42/tonne for the first time.

UK Energy Complex | 12 March 2021

Once again, carbon EUAs dominated the U.K. and European energy market narrative last week, as yet another financial institution published its views on the likely price trajectory of European carbon allowances. Bullish financial markets lent additional support to EUAs as major global indexes pushed higher. The argument for EU intervention in the European carbon market amid this latest rally continued to lose traction, with just one European Commission official, alongside the Danish climate minister, voicing concern over the impact of financial institutions on the price of carbon EUAs. In fact, the data suggest that the benefits of additional liquidity generated by financial institutions may outweigh the risks associated with speculation.

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Charlie Strange

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