EUA recovered from Tuesday’s fall amid boosted buying interest and stronger gas

Higher clean fuels costs and forecasts of slightly increased power demand raised the power spot prices in northwestern Europe yesterday, except in Germany where the current wind surge observed in the country maintained the prices at the same level. The day-ahead prices hence averaged 144.18€/MWh in France, Belgium and the Netherlands, +51.78€/MWh day-on-day, and 61.50€/MWh in Germany, only +1.39€/MWh from the previous day.

The EUAs sharply rebounded on Wednesday, rising by 5.9% and eroding all of Tuesday’s losses as the low prices (way below 58€/t for the first time in two months) attracted the participants, most them seeing the previous day’s retracement as largely overdone, while slight gains in the bullish gas market provided additional support. The Dec.21 climbing back above its 100-day moving average at the end of the session boosted the upward move and the benchmark contract eventually settled at 57.78€/t, +3.23€/t day-on-day. The carbon prices are however retreating this morning, and another settlement below the 100-day moving average could point toward further losses in the short-term, with few support to the market due to the lack of remaining gas-to-coal switching potential for this winter and the industrial demand destruction induced by the extreme energy prices. The very strong wind production across NWE may have also participated to the bearish pressure on the carbon market this week.

Meanwhile, the power prices posted moderate gains along the curve, buoyed by the stronger gas and carbon prices.