POWER: Italy October Power Tracks 1.3% Weekly Gain
The Italian front-month power base load contract is tracking a weekly net increase of around 1.3% as of Friday morning, with support from small gains in EU gas prices.
- Italy Base Power OCT 25 up 0.1% at 109.75 EUR/MWh
- Italy Power Cal 26 closed up 0.8% at 106.74 EUR/MWh on 18 Sept
- TTF Gas OCT 25 down 0.2% at 32.9 EUR/MWh
- EUA DEC 25 down 0.2% at 77.66 EUR/MT
- TTF front month is on track for a small net gain on the week supported by delayed return of Norwegian supplies from maintenance and reports that the EC is seeking an earlier phase out of Russian LNG.
- The latest two-week ECMWF weather forecast for Rome suggests mean temperatures have been revised up to remain above normal through most of the forecast period with slightly cooler weather mid next week.
- The PUN index settled higher at €116.05/MWh for Friday’s delivery, from €111.91/MWh a day earlier.
- Wind output in Italy is forecast at 805MW during base load on Saturday and at 879MW on Sunday, from 1.66GW on Friday. Solar PV output is forecast at 10.79GW during peak load on Saturday and at 9.94GW on Sunday, from 11.1GW on Friday according to SpotRenewables.
- Residual load in Italy is forecast at 23.62GWh/h on Saturday and at 20.06GWh/h on Sunday, from 27GWh/h on Friday, Reuters data showed.
- Power demand in Italy is forecast at 30.05GWh/h on Saturday and at 26.44GWh/h on Sunday, from 34.67GWh/h on Friday, Reuters data showed.
- Italian residential/commercial gas consumption is forecast at 28.1mcm/d on Saturday and at 28.8mcm/d on Sunday, from 34.5mcm/d on Friday according to Bloomberg.
- Italy’s hydro balance forecast has been revised down to end at 860GWh on 3 October, from 1.01TWh previously, Bloomberg data showed.
- Italian hydropower reserves last week – calendar week 37 – declined by 0.1TWh to 2.99TWh, widening the deficit to the five-year average and last year’s levels.
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Historical bullets
SEK: Weakening Into Riksbank
SEK is weakening a little into the Riksbank decision. EURSEK up 0.2% at 11.1996 at typing. Initial resistance the August 7 high at 11.2206.
GILTS: Off Early Lows
Gilts see similar price action to GBP STIRs at the open, moving lower, before recovering on cues from EGBs and the lack of meaningful hawkish repricing in the short end in the wake of the CPI data (we detailed the reasons why we thought that would be the case ahead of time).
- Futures traded as low as 90.54 before recovering to 90.77.
- Bears remain in technical control, initial support and resistance located at 90.43/91.32.
- Yields ~1.5bp lower across the curve.
- The May high in 10s (4.80%) remains untouched.
- 50s have pierced 5.00% over the past couple of sessions, but bears failed to force a meaningful move above the psychological level, 4.965% last.
- Outside of the CPI data, Brightmine wage growth (released overnight) once again held steady at 3.0% in Y/Y terms for the three months through July.
- Little of note on the UK macro calendar for the remainder of the day.
SILVER TECHS: Pullback Appears Corrective
- RES 4: $41.064 - 1.764 proj of the Apr 7 - 25 - May 15 swing
- RES 3: $40.285 - 1.618 proj of the Apr 7 - 25 - May 15 swing
- RES 2: $40.000 - Psychological round number
- RES 1: $39.655 - 1.500 proj of the Apr 7 - 25 - May 15 swing
- PRICE: $37.177 @ 08:23 BST Aug 20
- SUP 1: $37.090/36.216 - 50-day EMA / Low Jul 31
- SUP 2: $35.285 - Low Jun 24
- SUP 3: $33.940 - 50.0% retracement of the Apr 7 - Jul 23 bull leg
- SUP 4: $32.958 - Low Jun 2
Trend signals in Silver remain bullish. The pullback off the late July highs is considered corrective - particularly as prices have recently recovered off support at the 50-day EMA, now at $37.090. A clear break of it is needed to strengthen a short-term bearish threat and allow for a deeper retracement. This would open $35.285, the Jun 24 low. For bulls, a resumption of gains would refocus attention on the objective at $39.655 a Fibonacci projection.
