The active annual and monthly contracts on the Dutch electricity market have moved toward each other in recent months. As a result, both contracts now quote almost the same price. Because of the seasonal pattern, the price of the active monthly contract will continue to rise. The spread between the Dutch and French electricity prices has risen sharply over the past 1.5 years. This summer it was mainly the heat that disrupted electricity production in France. Its effect on the Dutch electricity price is partly offset by the well-filled water reservoirs in the Scandinavian countries.
The price of the EU ETS December contract is currently moving around EUR 74/t, within a range of roughly EUR 70-75 since May. The limited volatility is supported by relatively stable TTF gas prices and the absence of significant macroeconomic shocks. Investment funds have expanded their long positions in ETS, creating upward price pressure in recent weeks. At the same time, this increases downside risk in the event of sudden strategy changes by mutual funds.
