Futures market

The futures market was largely cautious and slightly weaker today. The German benchmark contract, Cal 27, was last trading at 92.70 EUR/MWh, down from the previous day’s close of 93.40 EUR/MWh. After reaching a daily high of 93.40 EUR/MWh, the contract slipped back to just below the current daily low. The overall trend remains sideways, as the gas market is currently calmer and new impetus is expected primarily from the weather. The heatwave is increasingly coming into focus, as it could boost electricity consumption and underpin residual load. The energy sector therefore remains fundamentally supported, although the futures market lacks a clear breakout catalyst in the short term.

Natural gas and LNG

A sober assessment of the situation prevails on the gas market today. The 2027 delivery year was last quoted at 34.71 EUR/MWh, slightly below the previous day’s level. The front month continues to trade at an elevated level of 41.60 EUR/MWh. Fundamentally, little has changed around the Strait of Hormuz. Current shipping data suggests that more LNG tankers carrying cargoes from Qatar are once again passing through the Strait of Hormuz. The market is therefore pricing in an easing of physical supply flows.

Nor has the explosion in Ras Laffan had any discernible impact on LNG supplies so far. The weather situation remains the decisive factor. The heatwave in Asia is increasing cooling demand there and, consequently, competition between Europe and Asia for flexible LNG volumes. In the short term, physical risks are being somewhat overlooked, whilst signals from negotiations are being viewed in a positive light. Fundamentally, however, gas remains well supported by weather risks and global LNG demand.

CO₂

The CO₂ market opened firmly today but subsequently gave up most of its gains. The EUA Dec 26 contract last traded at 80.54 EUR/t, down 1.01 EUR/t on the previous day. After reaching a daily high of 81.86 EUR/t, a weaker trend took hold as the day progressed. Fundamentally, the expected heatwave is supporting the market, as higher temperatures can increase electricity consumption and thus potentially boost the use of fossil fuels. At the same time, the decline indicates that some of this expected demand was already priced in. In the short term, CO₂ therefore remains well supported but vulnerable to profit-taking.

Spot market and general outlook

Spot market prices for tomorrow are exceptionally high. The heatwave is driving up electricity demand massively, whilst very low wind generation is expected at the same time. France is particularly in the spotlight, as high demand there is coinciding with low wind generation. Demand remains high during PV hours too, meaning that the usual price-dampening effect of solar generation is having only a limited impact. The shortage is also extending into the evening hours, which explains the extreme price spikes.

For Germany, the base price for tomorrow stands at 207.84 EUR/MWh. The highest quarter-hourly price reaches 747.10 EUR/MWh, whilst the lowest is 64.25 EUR/MWh. This results in a very high spread of 682.85 EUR/MWh. There are no negative prices, which further highlights the tight supply situation.

The picture is similar in Austria. The base price for tomorrow stands at 192.31 EUR/MWh. The highest quarter-hour reaches 645.20 EUR/MWh, whilst the lowest quarter-hour stands at 31.58 EUR/MWh. The spread is therefore 613.62 EUR/MWh. Overall, the short-term electricity market is clearly firm, characterised by hot weather, high demand, low wind generation and pronounced evening peaks.

Tomorrow’s auction yielded the following results:

Germany: 207.84 EUR/MWh

Austria: 192.31 EUR/MWh