Retreating gas prices offset part of worsening nuclear outlook

The European power spot prices posted slight gains yesterday, buoyed by expectations of weaker wind generation and French nuclear availability. The day-ahead prices averaged 185.69€/MWh in Germany, France, Belgium and the Netherlands, +14.43€/MWh day-on-day.

The EUAs went back and forth on Tuesday, surging to a new record high at 98.49€/t in the first minutes of trading on news that EDF reduced its nuclear output target for 2022, implying a stronger call for the more emitting thermal power plants, but fading back throughout the remainder of the day and suddenly falling by 2.3% at the end of the session, driven down by the dropping gas prices. The EUA Dec.22 eventually closed at 96.93€/t, only 23-cent above Monday’s settlement. The 5-day moving average seems to cap the losses so far, and despite the Relative Strength Index still pointing to overbought conditions, the MACD suggests that the bullish momentum remains strong. The gas market however appears to have a stronger impact lately on the carbon prices and more bearish news could push speculators to take their profits from three-week bullish rally of EUAs, although the bleak nuclear availability outlook and approaching compliance deadline could limit the downside.

On the power side, the EDF news lifted the curve prices with the largest gains extended by the French contracts, especially for the long-term contracts (winter 2022 and Cal23), less impacted by the retracement of gas prices.