(Montel) European carbon prices hit a three-week high on Thursday as traders brought forward some purchases to account for lower auction supply next month, while French nuclear outages prompted more bullishness due to increasing thermal generation.
The Dec 18 EUA contract reached EUR 15.77/t earlier in the session, its highest point since 11 June, though was last seen at EUR 15.73/t, EUR 0.21 higher.
The contract has gained 5% in the month to date.
Market participants were bringing forward EUA purchases to July, as allowances auctioned in August would halve to 2m/day, said Bernadett Papp of Vertis Environmental Finance.
“[After analysing] the price history since 2014, we saw that EUA prices in July increased every year but in 2016, with the [UK] Brexit referendum.”
Prices typically jumped more than 3% month on month in July due to purchases being brought forward, she added.
Traders also assumed “missing power supply” in France from the Cattenom and Paluel reactors (1,300 MW each), starting outages on Saturday, would be covered by thermal generation from neighbouring countries, lifting demand for EUAs, said Papp.
Coal extends high
European coal prices, meanwhile, extended the five-year highs seen in the prior session, with the API 2 front-year contract touching USD 92.20/t, though it was last seen USD 0.25 higher at USD 91.90/t.
Hot weather across Europe was spurring cooling demand from coal-fired plants, since it was allied to low wind generation, said Diana Bacila, senior analyst at Oslo-based Nena.
However, prices fell earlier as traders factored in constraints in German coal transportation, she said, with load capacity in barges for inland shipping – used to supply German coal-fired plants – capped at 60% due to reduced water levels in rivers.
European gas prices eased amid robust pipeline flows, said market participants, with the day-ahead contract on the UK’s NBP hub last seen down 0.15p at 56.50p/th and the equivalent on the Dutch TTF EUR 0.05 lower at EUR 22.27/MWh.
Reporting by:
Pablo Bronte
pablo@montelnews.com
16:27, Thursday, 5 July 2018