EUAs waned towards 60€/t as the third quarter ended

The power spot prices dropped yesterday in northwestern Europe, pressured by forecasts of strong wind and solar generation, higher French nuclear availability and slightly weaker demand. The day-ahead prices hence fell to an average of 114.75€/MWh in Germany, France, Belgium and the Netherlands, -20.77€/t day-on-day with only the French prices remaining above the clean coal costs.

Diverging from the bullish fuels and power markets, the EUAs faded yesterday and broke below the middle Bollinger band that had capped the losses on Wednesday. The downward move was mainly attributed to traders closing position before entering into the last quarter of the year and perhaps some bearish sentiment from concerns on more demand destruction induced by the endless rally of gas prices. Some market participants also pointed at the rumors of a potential European Commission intervention to limit the speculation in the market but as we explain in our report we see such motion as highly unlikely and it was confirmed by the Parliament’s agenda for their next meeting on October 6^th not including the debate proposed by the S&D. 

The 60€/t support resisted to the bearish pressure and the EUA Dec.21 rebounded after hitting the level to eventually close at 61.74€/t, -1.14€/t day-on-day.

Meanwhile, the power curve price s pursued their bullish run supported by the spiking gas prices, with the short-term contract posting the largest gains amid forecasts of cooler weather.