EUAs hit new record on bullish gas and option trading

The European spot prices started to fall yesterday, driven down by forecast of surging wind output, and should drop further today with a German wind generation expected to reach 28GW tomorrow. The day-ahead prices for today averaged 202.12€/MWh in Germany, France, Belgium and the Netherlands, -31.07€/MWh day-on-day but in line (+2€/MWh) with last week.

The EUAs extended their bullish rally and climbed to a new intraday all-time high at 67.89€/t as the gas market posted large gains as a consequence of the German regulators suspending the Nord Stream 2 certification process. Some market participants also pointed to the significant open interest of the EUA call options at 70 and 75€/t, with buyers attempting to push prices towards this level while call option sellers increased hedges due to the rising prices provided additional support. The EUA Dec.21 eventually closed at 67.55€/t, +1.62€/t day-on-day. On the technical side, the uptrend from September however seems offer some resistance and the Relative Strength Index climbing above 70 (89 at the time of writing) indicates overbought conditions for the Dec.21 contract.

The bullish gas and carbon markets continued to provide support to the power forward prices which posted significant gains along the curve.