EUAs broke above all-time high on combination of bullish factors

Except in the Netherlands where it edged down, the power spot prices slightly increased in northwestern Europe yesterday with support from higher gas and carbon prices combined with forecasts of high power demand and weaker wind output. The day-ahead prices averaged 233.18€/MWh in Germany, France, Belgium and the Netherlands, +5.22€/MWh day-on-day.

The EUAs soared by 4.2% on Monday and climbed above their all-time of 65.77€/t reached in September. The sharp upward move was attributed to a combination of rising gas prices following Russia once again booking no additional gas transit capacity during the monthly auction, forecasts of colder weather for the end of the month, some traders squeezing options dealers and some positive sentiment coming from the COP26 Glasgow Climate Pact. The support from the latter should however be limited (if any) as no impact or changes on the EU ETS are expected to result from the UN talks, with the EU having no intention to allow again the use of international offset for compliance obligations in the European carbon market. Reaching a new intraday high of 66.97€/t at the end of the day, the EUA Dec.21 eventually closed at a record 65.93€/t, +2.66€/t from Friday’s settlement.

Buoyed by the rising gas and carbon prices, the power forward prices extended healthy gains along the curve.