The announced easing of national lockdown measures, falling virus cases and further promising vaccine-related news helped lift U.K. power benchmarks higher across the curve last week. This was in despite of a weak flash composite Purchasers Managers Index (PMI) reading that indicated Britain’s economy contracted in the month of November.
Strengthened by a rally in the wider energy complex, U.K. gas contracts pushed higher across the curve. With lockdown restrictions set to ease next week, the forecast of below seasonal average temperatures, and the associated lift in demand, generated significant support for near-end contracts.
EUAs reached a fresh two-month high on Friday as fears about an extended auction-free period continued to drive bullish sentiment. Strong physical auction results were indicative of such fears with traders suggesting that the market was still not accurately pricing in the looming supply drought.
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