European forward power declines, key contracts down 4% since Friday

London — European forward power contracts opened some 5% lower Monday amid a sell-off in European equities due to coronavirus fears and a 30% plunge in oil prices.

By midday London time, most power contracts bounced off opening lows to trade some 4% below Friday's close.

Italian Q2 baseload fell just over Eur1/MWh or 4% from Friday's close to trade at Eur36.75/MWh on EEX.

The contract declined 15% over the past three weeks as the coronavirus spread rapidly in Northern Italy with now over 7,300 confirmed cases and the government placing a number of regions with 16 million people under emergency measures.

Italy's equity benchmark index plunged almost 10% on Monday with its financial center Milan at the epicenter of the outbreak in Italy.

Italy remains Europe's premium market for electricity with Q2 generally the most bearish quarter amid strong hydro inflows and falling demand.

"There is a chance of lower demand...most people are at home, hence a little drop is reasonable. I guess it's something affecting offices more than industrial production," a power trader in Northern Italy said.

Q2 contracts fell by a similar amount in France and Germany, with Europe's two biggest power export markets now trading below Eur30/MWh for the front-quarter.

Spanish year-ahead power prices Monday had fallen close to three-year lows at Eur42.60/MWh, rebounding from an intraday low of Eur41.75/MWh.

"I thought prices would be more bearish," a trader said.

EUA carbon allowance prices traded some 3% below Friday's close at Eur22.71/MWh, exchange data showed.

Gas prices meanwhile registered even smaller declines from already multi-year lows with front-month Dutch TTF gas down 2% at Eur8.48/MWh, ICE exchange data showed.

Trading volumes remained limited with many power traders working from home, sources said.