EnergyScan

EUAs recouped early gains as the market is evaluating the impact of a reform of the 29a article

The power spot prices remained mostly stable yesterday in northwestern Europe, edging down in Germany, Belgium and the Netherlands on forecasts of slightly stronger wind production and posting a 2.04€/MWh gain in France on dropping temperatures. The day-ahead contracts averaged 191.62€/MWh in the four countries, -5.68€/MWh day-on-day.

The EUAs strongly rebounded at the market open on Thursday and managed to climb back to 93.42€/t. The recovery was however short-lived and the carbon benchmark contract quickly fell back after a disappointing daily auction as the market continue to digest the news that the EU lawmakers are considering a reform of the article 29a, the EU ETS mechanism design to prevent to prevent prices spikes, while early losses in the gas market due to warm and windy weather forecasts provided additional pressure. The 90€/t support however held once again and the EUA Dec.22 slightly recovered in the afternoon to eventually close at 90.78€/t, nearly flat from the previous session (-1 cent day-on-day). The carbon prices dropped as low as 88.50€/t this morning but are currently climbing back to 90€/t. A strong settlement below that level could trigger some additional sell-off, although the Relative Strength Index is pointing to nearly oversold conditions, which suggest that EUAs could hover around that level in the short-term.

The power forward prices mirrored the variations of the gas and carbon market, rebounding in the first hour of trading, giving back the gains later in the morning and recovering in the afternoon. Most contracts nonetheless closed below the previous day’s settlement.

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