EU power prices move further north

Bulls kept control of European power curve prices on Thursday with concerns over poor nuclear availability pushing France Q4-22 base and peak prices to new record highs at €790/MWh and €1522.45/MWh respectively at the close on the EEX exchange yesterday. Cal-23 prices hit new highs across Europe as well on the back of another surge in gas prices following reports of a possible bailout of Uniper by the German government, risks of strikes impacting Norwegian gas production and concerns over the upcoming annual maintenance of Nordstream 1. The benchmark German base Cal 23 contract traded as high as €298.25/MWh intraday yesterday.

The trend was rather bearish at the spot level on the back of rising wind speeds with a €25/MWh day-on-day drop in the average day-ahead price for the FR+DE+BE+NL group. Note that power demand destruction due to high prices seems to strengthen in Germany, with a 3.5% drop in the average daily power load in June 22 compared to the 2015-2021 average level (see chart).

In terms of outlook for today, EUA prices could find some technical resistance in the short term after the Dec22 contract breached the €90/t level yesterday and is now trading above its 20-day Bollinger high. Nevertheless, expectations of strong coal-fired power generation next winter should continue to provide fundamental support amid the current uncertainty on the EU ETS reform. Most contracts are also trading in overbought territory on the power curve, which could limit gains in the very short term.