An eye toward 100€/t ?

The power spot prices were mixed in NWE yesterday, fading in Germany and France on forecasts of slightly weaker power demand and stronger wind output, but steady in Belgium and the Netherlands with possible support from the higher fuels and carbon prices. The day-ahead prices averaged 206.53€/MWh in the four countries, -10.06€/MWh day-on-day.

Facing little to no resistance, the EUAs soared by 4.50% on Tuesday, driven up by the sharply rising energy prices amid forecasts of colder weather and a continuously tight gas market, while further call options delta and gamma hedging and speculative buying provided additional support to prices. The EUA Dec.21 eventually closed at 84.91€/t, +3.66€/t from Monday’s settlement, but already climbed up to 87.15€/t this morning, with financial players likely eyeing at the 100€/t level. Nonetheless, keep in mind that the benchmark contracts has been in overbought conditions for over a month now, and some traders could be tempted to take their profits from the massive rally observed over the past weeks at first signs of weakness in the strong uptrend of carbon prices, for instance if weather forecasts start pointing to warmer temperatures.

Buoyed by the surging gas and emissions prices, the power forward prices posted massive gains along the curve yesterday.

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