Italy: Weak euro and firmer Brent lift far curve
The Italian wholesale electricity far curve moved in positive territory on Tuesday, as a firmer Brent crude combined with a weaker euro against the dollar − leading to costlier oil − to lift the contracts.
On the short term, higher spot levels provided support to the prompt.
As Brent crude moved upwards on positive macroeconomic data from Germany and the US after two session of losses, the Italian Calendar Year 2013 Baseload gained €0.25/MWh to close at €78.00/MWh.
However, the contract did not change hands during the session.
"The front year is not dealing very often, there is a lot of uncertainty on it − I think we will have to wait until spring to understand the hedging strategies of gas-fired plants operators. The uncertainty is on the benchmark they are using for hedging − PSV gas prices or prices from the oil-linked formula?" one source said. "Market participants thus concentrate on the 2012 quarters."
Since the beginning of the year, the 2012 quarterly contracts dealt a total 7.6GW, compared with 2.4GW on Cal '13, according to ICIS Heren data.
The same picture emerged on Tuesday, with most of the 40 trades focused on the quarters, which all gained value session on session.
Closer in, the monthly contracts closed in positive territory as well. Higher spot levels this week lifted the front month.
After averaging at €72.27/MWh in week 10, the PUN Day-Ahead has averaged at €78.01/MWh in week 11 so far.
One trader considered April '12 Baseload's price high.
"It incorporates rumours of some maintenance work on the Italian grid between 2 and 20 April," he said.
It was not possible to contact the Italian transmission system operator (TSO) Terna for details at the printing time. SM
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