EUAs retreated after a bullish opening

The European power spot prices climbed towards (and for some above) 300€/MWh yesterday, buoyed by soaring gas prices and forecasts of colder temperatures and weaker wind output. The day-ahead prices averaged 302.31€/MWh in Germany, France, Belgium and the Netherlands, +34.16€/MWh day-on-day and +85.72€/MWh from last week.

After a bullish opening driven by the surging gas prices, the EUAs quickly reversed and faded back throughout Monday as option traders continued to sell back their hedges ahead of the options expiry coming tomorrow. The EUA Dec.21 rose by 3€/t from Friday’s settlement and up to 86.76€/t  in the first hour of trading yesterday, dragged up by the hefty gains posted by the gas market, before option traders took advantage of the higher prices to liquidate their hedges, bringing the benchmark back down towards 80€/t. The Dec.21 closed at 82.12€/t, -1.61€/t from Friday’s settlement and is opening lower this morning, although the 80€/t level is likely a materialize as a strong support.

The power curve prices extended massive gains on Monday, lifted by the surging gas prices and the early ascend of emissions, and ignoring the following retracement of the latter.