EUAs retreated after breaking another record

Strongly pressured by forecasts of surging wind output, the power spot prices dropped in northwestern Europe yesterday, with Germany presenting the largest losses as the country is expected to face up to 45GW of wind generation by midday. The day-ahead prices hence averaged 196.41€/MWh in Germany, France, Belgium and the Netherlands, -75.53€/MWh day-on-day with prices ranging from 123.84€/MWh in Germany to 271.99€/MWh in France.

The EUAs quickly jumped to a fresh record high at 75.76€/t on Monday morning with support from weather forecasts revised colder, an overall rebound of the wider markets and likely additional option hedging as would suggest the sharp rise in EUA 80€/t-strike calls open interest observed at the end of last week. The emissions prices however reversed mid-morning and faded back throughout the remainder of the day and the Dec.21 contract eventually settled at 74.21€/t, +1.43€/t from Friday’s close. The bullish momentum of CO2 prices is slightly easing, which could point to a consolidation within the 70-76€/t range in the short-term, if the Omicron situation does not worsen. Another attempt at the 80€/t level could be seen later in December when the market start to stock allowances in anticipation of the annual EUA auction break.

Buoyed by the rebound of gas prices and the early gains in emissions, the power forward prices posted gains along the curve on Monday, despite retreating from an early surge.