UK Power Pricing Trends | 5 February 2021
Moderate temperatures and stronger gas supplies into Europe weighed on near-end U.K. power contracts last week. However, a surge in carbon EUAs saw seasonal power contracts push higher throughout the week. Strong auction demand and an increase in speculative positions saw the benchmark Dec-21 EUA rally almost 16% week-on-week. Higher carbon prices lifted seasonal gas futures too, lending additional support for longer-dated power contracts.
UK Natural Gas Pricing Trends | 5 February 2021
Short-end U.K. gas contracts were pressured lower last week by forecasts for milder temperatures and, on average, stronger output from renewable generation sites. Additionally, a stronger LNG import schedule provided additional price pressure, with the U.K. expecting 4 tankers to arrive at the Isle of Grain terminal before mid-month. Conversely, longer-dated seasonal contracts pushed higher, chiefly on the back of surging carbon EUA prices.
UK Energy Complex | 5 February 2021
Poland saw its first EUA auction of the year last week, and prices settled at a considerable premium to the secondary market as the nation’s coal-heavy power generators rushed to hedge their emissions costs. The Polish auction contributed to the week’s overwhelmingly bullish narrative around carbon, driven primarily by a renewed appetite of institutional investors to bet on bullish price movements in the months to come. Oil also pushed higher, nearing $60/barrel, as the vaccine rollout promoted a more promising demand outlook, while global supplies continued to tighten.
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