EUAs hit new record despite weaker energy complex and rising covid concerns

The European power spot prices rose above to 230€/MWh for today (and up to 251.84€/MWh in France), lifted by forecasts of lower wind and hydro generation combined with colder temperatures strengthening the power demand. The day-ahead prices averaged 228.75€/MWh in Germany, France, Belgium and the Netherlands, +33.20€/MWh from Friday but in line with the previous week (+0.79€/MWh) as the lower prices in the Netherlands offset the higher prices in the other 3 countries.

Despite a weakening energy complex and rising concerns as several countries started implementing back lockdown measures, the EUAs soared to another fresh intraday record for the 8^th consecutive session on Friday, and finally reached the 70€/t level this morning. The market participants continued to attribute the strong bullish rally of emissions prices to technical and option trading, possibly strengthened by the ESMA’s report published late on Thursday finding no evidence of anti-competitive trading behavior from non-compliance players in the EU ETS, although any intervention form lawmakers to curb speculation in the market remained highly unlikely despite the EC’s investigation. The EUA Dec.21 contract eventually closed 69.36€/t, +26-cent day-on-day but with a significant 6.09€/t (+9.6%) weekly gain.

Conversely, the fading gas prices drove the power forward prices down over the last session of the week, with the largest losses posted by the short-term contracts.