BRUSSELS, March 31 (Reuters) – The European Fee will lengthen its fuel value cap system to all buying and selling hubs within the European Union from Might to forestall potential distortions to Europe’s vitality markets, it mentioned on Friday.
EU nations agreed the cap in December after drawn-out talks over taming fuel costs that hit file ranges after Russia reduce fuel deliveries to Europe following its invasion of Ukraine.
For now, the cap is triggered if costs exceed 180 euros ($196) per megawatt hour for 3 days on the Dutch Title Switch Facility (TTF) fuel hub’s front-month contract.
The TTF value should even be 35 euros/MWh increased than a reference value based mostly on present liquefied pure fuel (LNG) value assessments for 3 days.
TTF derivatives account for greater than 90% of the pure fuel derivatives traded on regulated markets within the European Union.
The Fee mentioned its “market correction mechanism” would lengthen to derivatives linked to buying and selling in all different EU hubs from Might 1.
The EU govt mentioned the transfer would supply a good broader defend towards excessive and risky fuel costs and assist keep away from potential distortions from making use of it solely to TTF derivatives.
If triggered, trades wouldn’t be permitted on the front-month, three-month and front-year TTF contracts at a value greater than 35 euros/MWh above the reference LNG value, which is presently set at 39.09 euros/MWh.
This caps the value at which fuel may be traded, however the cap can fluctuate alongside world LNG costs – a system designed to make sure EU nations can nonetheless bid for fuel in world markets.
The front-month TTF fuel value contract hit a file excessive of 343 euros in August, however was buying and selling on Friday at 45.70 euros/MWh, Refinitiv Eikon knowledge confirmed.
The cap mechanism is designed to be short-term, making use of till January 2024.
($1 = 0.9185 euros)
Reporting by Philip Blenkinsop; Modifying by Jan Harvey
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