EUAs retreated as a consequence of surging power and gas margin calls

The European power spot prices dropped yesterday amid expectations of weaker demand and surging wind output. The day-ahead prices averaged 357.14€/MWh in Germany, France, Belgium and the Netherlands, -58.65€/MWh from the previous day.

Despite a mid-day (short-lived) recovery, the EUAs eroded 5% on Wednesday in a retreat mostly attributed to traders offloading allowances to raise cash in order to cover for the rising margin calls in the power and gas markets. The market participants also pointed to the erratic moves of carbon prices, the market currently observing a lack of liquidity and fundamental drivers as most traders focus on the soaring gas and power prices. The EUA Dec.22 eventually closed at 76.83€/t, -4.11€/t from Tuesday’s settlement.

The power forward prices were mixed yesterday, several contracts for a Q1 2022 delivery posting losses (especially in France) while further on the curve prices continued to soar on supply concerns.

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