Sideways variations of the energy complex

The European power spot prices remained once again overall steady and just below the clean gas costs yesterday amid mostly unchanged fundamentals. The day-ahead prices hence averaged 230.14€/MWh in Germany, France, Belgium and the Netherlands, +9.21€/MWh day-on-day but could face some pressure for tomorrow and the upcoming weekend from the increasing solar generation forecasted and the return from maintenance of the Belgian nuclear reactor DOEL-2 (0.43GW) initiated yesterday.

The carbon prices took opposite direction from the gas and power markets on Wednesday. The EUA benchmark contract indeed plummeted to 78.80€/t in the first hours of trading, driven down by the previous day’s bearish momentum resulting from the report that Russia halted gas supply to Poland and Bulgaria as they refused to make payments for it in rubles, and subsequent fears of demand destruction. The energy complex however reversed mid-morning and the emissions prices managed to climb back above 80€/t as the gas and power forward markets observed a steep retracement. If the latter gave back most of their sharp gains before rebounding again at the end of the session, the EUAs steadied in the afternoon with several market participants pointing to a heavy selling pressure absorbed by passive bids.

The EUA Dec.22 eventually closed at 81.01€/t, -1.70€/t from Tuesday’s settlement.

In another note, the ICE’s commitment of traders report published yesterday confirmed that last week’s sudden surge of carbon prices was driven by speculative and technical buying rather than fundamentals, showing a 40.1% increase of the investment funds’ net long position on the week ending April 24^th.