Supply concerns continued to buoy the energy complex

The European power spot prices slightly increased yesterday amid higher clean fuel costs and forecasts of stronger power demand combined with easing wind output. The day-ahead prices hence averaged 332.25€/MWh in Germany, France, Belgium and the Netherlands, +16.23€/MWh day-on-day and +27.12€/MWh from last week.

The power curve prices posted moderate gains over the first session week, extending their continuous bullish trend driven by gas supply worries and nuclear uncertainties for this winter. While the French Q4 2022 contract climbed above 700€/MWh with a massive 46.65€/MWh increase from the previous session, the German Cal23 also observed a surprisingly high 7.14€/MWh gain from Friday.

The EUAs rose as well on Monday, supported by healthy utility hedging, although the carbon benchmark contract remained right in the middle of its 78-92€/t trading range as most participants waited for the European Council’s meeting scheduled today, dampening the market’s liquidity. The environmental ministers will indeed aim to agree on a “general approach” over the ETS revision as part of the Fit for 55 initiative, which could spur some volatility in the market in the upcoming hours. The Council is expected to support a position closer the Commission’s proposal, but the Parliament’s first vote early-June has taught us that a surprise is never to be excluded in the carbon market. The EUA Dec.22 closed on Monday at 85.05€/t, +1.62€/t from Friday’s settlement.

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