Weekly energy market update:
- Overall, the power market prices were stable this week. However, the tense geopolitical situation and uncertainty around Russian gas supply are likely to continue providing sentiments to the market limiting the downside.
- The gas stock levels continued to recover rising to 42% in Europe amid the strong LNG gas deliveries from USA and Qatar.
- The market is awaiting news about whether the EU will agree on a phased-in embargo on Russian oil as proposed by the EC as Hungary demands an exemption from any embargo. The ban could displace between 2,5 and 3 million bbl/day.
- OPEC agreed to boost supply in June by 0,432 million bbl/d, slightly above the prior monthly levels since August last year.
- European coal prices were lower as Russian exporters maximize shipments ahead of the EU ban on imports from the country. Analysts expect that there is little scope for growth in coal exports from Australia, Colombia and South Africa this year.
- Spain and Portugal approved last Friday a 48,8 EUR/MWh cap on gas prices for power generation for a period of 12 months. This will mainly affect the day-ahead market price where the average price is expected to be ~120-140 EUR/MWh vs >200 EUR/MWh currently. Similar measures can be extended to the other EU member states.
- The EU parliament tries to boost climate efforts. The environment committee (ENVI) agreed last week that the ETS should deliver a 67% emissions reduction below 2005 levels by 2030, substantially overshooting the Commission’s original proposal of 61%. This means that carbon prices can increase from 80 to 100 EUR/t. Yet, the recession worries can keep the prices under pressure.
To read the prior week’s European Energy Market Update, please follow the link here.