Daily (03.09.2019): EU carbon prices sank by over 4% on Monday, amid growing Brexit turmoil

03/09/2019 11:41 Daily

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Crude oil prices remained bearish on Monday, as the recent import tariffs resulting from the latest trade war escalation between the U.S. and China have started to apply, raising concerns over a tighter demand outlook. The impact of Hurricane Dorian near the Florida coast also posed a threat for the crude demand. Further downward pressure came from higher oil production by OPEC members in August, for the first month this year. As a result, Brent crude dropped by 2.9% to $58.66 a barrel, while WTI futures lost 0.5% to settle at $54.84 a barrel.

Increased domestic and Norwegian supply along with lower-than-expected demand continued to drag down the UK wholesale gas prices on Monday. Moreover, a Qatari LNG vessel is due to arrive in Britain this week. The decline in oil prices also weighed on the market sentiment. NBP spot fell sharply by 19.6% to 21.30 p/therm, amid expectations for reduced exports to the continent via the Interconnector UK pipeline. At the same time, the contract price  for delivery in Q4 2019 tumbled by 4.4% to 39.89 p/therm. 

 

European spot electricity prices reversed trend on Monday due to higher demand forecasts. The French prompt power price soared by 12.8% to 36.39 EUR/MWh amid stable nuclear availability. In the meantime, the German equivalent contract hiked by 5.2% to 35.40 EUR/MWh. 

 

Further on the curve, power prices turned bearish on Monday influenced by the decline in carbon prices and a weaker energy complex. The German Cal 2020 delivery contract lost 3.3% to end at 47.03 euros/MWh. The French equivalent contract traded 2.9% down at 48.87 euros/MWh.

 

European carbon prices extended losses on Monday, as traders focused on the UK government plan to call an early general election on October 14 aimed at preventing the UK parliament from blocking a no-deal Brexit. Hence, heightened political uncertainty in the UK sent the 2019-expiry contract 4.3% lower at 25.19 euros/tonne.

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