Carbon prices extended arguable gains as rouble gas payment story continued to drive the energy complex

The European power spot prices remained impressively flat for weekend and today as a sharp drop of nuclear availability and ongoing wind shortage offset the lower power demand. The day-ahead prices averaged 218.39€/MWh for today in Germany, France, Belgium and the Netherlands, -9.60€/MWh from Friday and -4.07€/MWh week-on-week.

On the curve, prices continued to mirror the gas market and recovered from a bearish opening throughout Friday before plummeting back at the end of the session as energy traders further debated on how to get out of the rouble gas payment turmoil without breaching EU sanctions. The power forward prices ended the day and week mixed, the market being continuously torn between strong LNG imports and weak short-term demand on one side, and coal and gas supply disruption concerns on the other.

Despite a temporary mid-day correction following a weak auction result, the carbon prices observed an overall bullish last session of the week with a surprising positive correlation with the other energy markets. Most of the gains were seen in the first hours of trading and in the afternoon as the carbon benchmark contract corrected after the daily auction cleared with a 30-cent discount to the secondary market, but the upward move was once again attributed to the market’s very low liquidity rather than an actual fundamental bullish driver, some participants pointing to a possible attempt to squeeze short positions. The EUA Dec.22 closed the week and month at 84.45€/t, +1.77€/t from Thursday’s settlement and -4.54€/t (-5.10%) from the previous week. The bullishness might however be short-lived as worries over a global economic slow down could pressure the market in the upcoming days.

Last week was also marked by the EU ETS 2021 compliance deadline, operators having until Saturday to surrender the carbon allowances corresponding to their emissions from last year.