Last week, EUAs experienced significant volatility and ultimately registered a 3.8% decline, following a similar movement in the price of Dutch TTF. This decline was the result of easing geopolitical tensions between Israel and Iran.

Auction volume: 13.4 million EUAs, 2 million more than last week.

Looking ahead, we anticipate EUAs to continue on a downward trajectory, as tensions in the Middle East are fading away and energy fundamentals are neutral. However, sudden geopolitical developments could still arise, leading to increased volatility and possible price spikes. Excluding such occurrences, our outlook suggests a sideways to the bearish trajectory for the week.

On April 18, gas storage reached 61.77% full, slightly increasing from the 60.61% recorded on April 11. Weather forecasts anticipate below-average temperatures across much of Europe for the next two weeks, as reported by Weather Services International. Geopolitical tensions eased slightly, with Iran refraining (for now) from further actions against Israel, leading to a reduced influence on gas prices. However, the day-ahead auction in France surged by 243% to 59.61 euros/MWh on Epex Spot, marking the highest level since March 19, up from 17.40 euros/MWh the day before. Gazprom was compelled to close several natural gas-producing wells in the Orenburg region to prevent flooding. Meanwhile, Ukraine announced plans to resume small power exports starting Sunday. In contrast, the German BDI warned of potential further slumps in industrial production extending into 2024.

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‍Technical Analysis

The technical outlook for EUAs appears predominantly bearish. Analyzing the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) on a daily chart suggests a potential downward trajectory, in line with the technical analysis of the Title Transfer Facility (TTF). Examining the smaller Fibonacci retracement, initiated from the start of April, anticipates a potential decline to 64 levels, coinciding with support within the uptrend channel. Subsequently, the next support resides at the current MA(50) level of 60.39. However, breaching this channel seems less probable at the moment, indicating a reprieve from such lower-price territories.

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AFS ENERGY B.V.

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