German contracts benefit from rising gas and carbon prices
German power contracts for the year ahead traded higher on Friday. They followed gains in carbon permits and gas contracts, as temperatures are forecast to be below average for the rest of January.
By 0855 GMT, the German baseload year-ahead rose by 0.9% to 87.9 euros ($101.12 per megawatt-hour).
The French equivalent has not yet started trading following its?closing? at 50.65 euros/MWh. Europe's benchmark contract for gas was up 2.1% to 34.51/MWh. This extended Thursday's gains, as cold weather forecasts caused supply concerns. Mind Energy analysts said that temperatures in Europe will be a few degrees lower than the seasonal norm next week before conditions get even colder at the end of the year.
The benchmark carbon contract on the European market also increased 0.3%, to 92.49 euro per metric ton. On Thursday, it reached a intraday high of 93.80 euro per ton. This was its highest level since June 21, 2023.
Matthew Jones, an analyst at ICIS, stated that the coming supply imbalance led to a "build-up" in the price of carbon contracts, creating an opportunity for investors 'in the last few months' to take a long position.
He added that there would be a review of the market in July, and more allowances could be put on the market. This helps to moderate the price increase, as there is the threat of market intervention if the prices rise too much.
LSEG data shows that the German and French baseload day-ahead contracts for?Monday have not yet started trading.
According to LSEG analyst Riccardo Paraviero, the residual load in Germany - that portion of demand which must be met by conventional sources after renewable energy is subtracted – will increase on Monday as wind power supply should fall more than?demand.
He added that similar trends should be expected in the rest of the area.
LSEG data shows that the German wind energy generation will?fall by 4 gigawatts on Monday to 21.2 GW while the?French production is expected to fall by 4.9 GW down to 2.7 GW.
On Monday, it was forecast that power demand would drop by?1.2 GW (about 1.6 GW) in Germany and rise by 820 MW (about 920 MW) in France. A German source said that the budget committee of Germany has approved the purchase by the German division TenneT of a minority share in its high-voltage transmission grid.
(source: Reuters)
