EUAs shed early gains as gas prices surged again

Except in France where prices were supported by higher gas prices and forecasts of stronger demand, the European power spot prices went down yesterday, pressured by the currently surging wind output. The day-ahead prices averaged 189.93€/MWh in Germany, Belgium and the Netherlands, -51.09€/MWh day-on-day, and reached 317.50€/MWh in France, +23.30€/MWh from the previous day.

After a bullish opening, the carbon prices reversed mid-morning and plummeted by 6% as Russia’s confirmation of requirement of gas payment in Ruble from April 1^st  drove the gas prices sharply up on renewed supply concerns. The middle Bollinger band however capped the losses and the EUAs managed to slightly recovered at the end of the session to eventually close at 76.48€/t, -1.83€/t from Wednesday’s settlement. Some market participants attributed the on-going negative correlation of the EUAs with the gas prices to the costs of trading recent increase and traders consequently liquidating carbon allowances in order to raise cash to maintain their positions. Other also pointed to potential fear of industrial demand destruction due to the high energy prices and bleak economic outlook. As for today, beside the gas market’s tension the carbon market’s focus should be on the publication of the 2021 verified emissions, estimated to have risen by 8 to 9% year-on-year.

Observing another volatile session driven by the gas market, the power forward prices ended the day mixed yesterday, most short-term contracts posting moderate gains while further on the curve numerous prices were seen down from their previous settlement.