After the record came the fall

The European power spot prices fell back yesterday as forecasts of a sharply rising wind output pressure the market despite expectations of stronger power demand (particularly limiting the losses in France) and weaker solar generation. The day-ahead prices hence averaged 137.85€/MWh in Germany, France, Belgium and the Netherlands, -18.15€/MWh.

Pursuing their significant bullish rally started late last week, the EUAs climbed to fresh intraday record of 65.77€/t in the first hours of trading yesterday. The upward move however quickly stopped and, after hovering around 65€/t for a time, the carbon prices collapsed mid-afternoon, erasing most of Monday and Friday’s gains. The reversal and sharp fall of the emissions prices seems to coincide with a similar (but more moderate) retracement of the gas and wider energy markets amid news of increased flow through the Yamal pipeline, but most of the market participants also attributed the losses to strong profit taking following the recent bullish of run of EUAs that brought them up by 11% since last Monday. The plunging equities at the same time might also have provided additional pressure on the carbon market.

The EUA Dec.21 eventually closed at 61.92€/t, -2.45€/t (-3.8%) from Monday’s settlement.

The power curve prices marked a new record as well on Tuesday morning, and observed a similar sharp retracement than of the gas and carbon markets in the afternoon, although their correction was weaker than the emissions and most contracts managed to post hefty daily gains nonetheless.