Power and carbon prices faded on gas sell-off

The European power spot prices fell yesterday on a combination of lower gas prices, improving French nuclear availability and forecasts of surging wind and hydro production with the wind generation expected to climb above 40GW in Germany. The day-ahead prices averaged 139.82GW in Germany, France, Belgium and the Netherlands, -43.22€/MWh day-on-day.

Albeit staying in a much narrower trading range, the carbon prices tracked the variations of the energy complex on Tuesday while participants debated on the necessity of an intervention in the EU ETS ahead of the Parliament’s amendment proposals expected today. The EUAs dropped mid-morning as news that some Russian troops were moving away from Ukraine’s border drove the gas prices sharply down, but the middle Bollinger band stopped the Dec.22 downward move and after a slight recovery the benchmark contract eventually closed at 91.14€/t, -0.62€/t day-on-day. Most traders however attributed yesterday’s prices moves to the market’s uncertainties and noises from the energy complex rather than to an establishing trend, with participants waiting for MEP Peter Liese’s reform proposals before taking a position. Today’s publication could put some bearish pressure on the carbon market but beware that the expected reform of the Article29a could take one to two years to be implemented and the carbon prices could be far from the triggering conditions of the mechanism by then. EUAs have already broken below their 20-day average and 90€/t support this morning driven down by hefty losses in the gas market.

The power forward prices extended sharp losses yesterday, strongly weighed by the significant sell-off in the gas market.