In the second week of December 2023, average electricity prices in most major European markets saw an increase compared to the previous week. The Nordic countries’ Nord Pool market was the only exception, experiencing a slight decline of 0.7%. Among the rising prices, the IPEX market in Italy saw the smallest increase at 3.2%, while the other analyzed markets observed significant price hikes. The MIBEL market (Spain and Portugal) saw a 18% increase, and the EPEX SPOT market in Germany saw the largest jump, with prices rising by 55%, AleaSoft reports.
By mid-December, weekly average prices surpassed €120/MWh in most European markets, except for the Nordic market, which had the lowest average at €45.17/MWh. The Dutch and German markets saw the highest weekly averages at €165.41/MWh and €176.85/MWh, respectively. Other markets had prices ranging from €123.25/MWh in Spain to €156.19/MWh in the UK’s N2EX market.
Most markets recorded their highest prices of the week on December 12. On that day, the Belgian, British, and Dutch markets reached their highest prices since December 2022, while the Iberian market saw its highest price since March 2023. In Italy, prices peaked on December 11, hitting the highest value since January 2023. Similarly, the French market saw its highest price since February 2023 on December 13.
The price increases during the week of December 9 were driven by factors such as a rise in electricity demand, a drop in wind energy production, and a decrease in solar energy generation in Germany and France. Despite the decline in weekly gas prices, these factors contributed to higher electricity prices across European markets.
AleaSoft Energy Forecasting’s predictions for the third week of December suggest that electricity prices will drop in most European markets due to increased wind energy production and reduced demand. Solar energy production is expected to increase in Germany, Spain, and Italy.
On the commodity front, Brent oil futures saw price increases during most sessions of the second week of December. The lowest weekly settlement price was recorded on December 9 at $72.14 per barrel, but by December 13, the price had risen to $74.49 per barrel, a 4.7% increase from the previous Friday. This rise was fueled by growing concerns over potential increased sanctions on Russia and Iran, geopolitical instability in the Middle East, and economic stimulus plans in China. Additionally, expectations of US interest rate cuts and monetary easing in Canada, Europe, and Switzerland contributed to the upward trend in oil prices.
In contrast, TTF gas futures saw declines in all but one session of the second week of December, with a slight increase on December 10 when prices reached €45.55/MWh. However, by December 13, prices dropped to €41.22/MWh, marking an 11% decline from the previous Friday and the lowest level since November 7. This drop in gas prices was attributed to stable gas supply and milder temperature forecasts across Europe.
CO2 emission allowance futures in the EEX market for the December 2024 reference contract experienced a price drop of 2.8% at the start of the second week of December, falling to €66.37/t on December 9. Prices later recovered and reached a peak of €68.63/t on December 11, but by December 13, they dropped again to €64.43/t, marking a 5.7% decrease from the previous Friday. This was the lowest level for CO2 prices since early November.
Overall, European electricity and commodity markets saw significant fluctuations in the second week of December, driven by changes in energy production, supply stability, and geopolitical factors. The forecast for the following week indicates a likely decrease in electricity prices, along with continued shifts in oil, gas, and CO2 emissions markets, AleaSoft reports.
