Email of the day on European electricity prices
Comment of the Day

August 31 2022

Commentary by Eoin Treacy

Email of the day on European electricity prices

I wonder if it's possible to add the French and German electricity contracts in the chart library? thanks!

Eoin Treacy's view

Thank you for this suggestion. European energy has certainly become topical this year. Historically we have only updated prices for Nordpool contracts because so many Danish and Swedish electricity traders have come to The Chart Seminar. I do hope they remember acceleration is a trend ending.
The original German (MQ) baseload contract became defunct in 2012. I’ve replaced it with the newer Baseload index and done the same for France. All our energy charts can be found in the Energy section of the Chart Library menu.

Until the recent volatility, European electricity prices have had significant arbitrages because of regional supply differences. In the north, hydro is a big factor. In Germany, it is all about Russian gas, wind and imported coal-fired power. For France, the insulation of nuclear meant it was never a relevant trading market until this year. The regional divergences mean the charts and price action do a better job of showing how the various pieces of fundamental data fit together than any other tool.

This week’s large downward dynamics, following the announcement that the EU’s indiscriminate buying has succeeded in accelerating the timeline for building stockpiles, suggests less urgent demand in the coming months.

Europe is going to bump up against physical limitations for storage before the winter begins. The downside is storage is not designed to substitute for supply only to supplement it. That implies scope for very large peak to trough swings over the next nine months.
Floating storage and regasification services will continue to attract a premium. Excelerate pulled back sharply in a kneejerk manner yesterday but is now steadying again.

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