Bearish sentiment continued to prevail in the carbon and power markets

The plummeting gas, coal and carbon prices amid comfortable supply and weakening demand pressure the European power spot prices yesterday. The day-ahead prices indeed faded by 17.74€/MWh from the previous day in Germany, France, Belgium and the Netherlands to reach 173.79€/MWh.

The falling fuel complex drove the power forward prices down as well while forecasts of a wind surge provided additional pressure on the front of the curve.

The carbon prices dived further on Monday as bearish sentiment from the recent Commission’s proposal to sell 20bn€ worth of allowances from the MSR to end the EU’s reliance on Russian fossil fuels prevailed continued to fuel the sell-off. The measure is however facing opposition from several member states  fearing that the additional supply will curb their much-needed revenue from the carbon allowances auctions and that the proposal is inconsistent with the EU decarbonization objective, the already-plummeting prices weakening the incentive to reduce emissions. The EUA Dec.22 closed the day at 75.15€/t, -2.24€/MWh from Friday’s settlement. The recently fading gas prices and rising coal have pushed the carbon prices back into the coal-to-gas switch range. The increased competitivity of the gas power plants could provide additional pressure on the carbon prices in the upcoming days, although the gas and carbon contracts, both in technically oversold territory, could be due for a technical rebound first.

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