EnergyScan

Commission’s proposal to auction EUAs from MSR continued to pressure the carbon market

The European power spot prices fell below 200€/MWh for today as gas dropping gas and carbon prices combined with forecasts of soaring wind production pressured the market. The day-ahead prices averaged 191.52€/MWh in Germany, France, Belgium and the Netherlands, -17.04€/MWh from Friday and -15.73€/MWh week-on-week.

The power curve prices ended up mixed for the last session of the week, the short-term prices tracking the plummeting EUAs and fading gas prices amid sustains Norwegian, LNG and Russian gas flow as the markets had already anticipated the just-announced halt of Russian gas flow to Finland, while further on the curve prices inched up, possibly supporting by the worrying French nuclear availability outlook keeping the country’s prices at a massive premium over its neighbors.

On the carbon market, prices dived further by 3.3% on Friday as the Commission’s proposal to auction allowances from the MSR continued to weigh on the market and to offset the Parliament ENVI’s more ambitious reforms voted earlier in the week. EUAs rebounded midday after EEX announced a revision of its 2022 auction calendar (see announcement here) leading to a 12mt reduction of the volumes to be sold due to a miscalculation, but the recovery was short-lived and prices fell back at the end of the session. The EUA Dec.22 closed the week at 80.39€/t, -2.79€/t from Thursday’s settlement and -8.09€/t (-9.1%) week-on-week. The carbon benchmark contract is currently in oversold territory and seems to be rebounding this morning, the market likely taking a break after last week’s crash. Several market participants are pointing to the 80€/t level as a strong support which could lead to a significant option-driven sell-off if broken.

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