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This newsletter was published 25.11.2020 at 18:54pm CEST.
The current prices on the European carbon market are as follows:
EUA prices are holding the gains as only 13 auctions remain in 2020. Adding to the last week’s news from European Commission about 2021 auctions delay, free allocation of EUAs in 2021 might get delayed as well. All this is creating a temporary imbalance in the market where supply will be cut off. Historically, December was an uptrending month and with the current situation, markets are aligning for further gains once again. Auctions have been well bid, which is to be expected as we are nearing the start of a possible two month no auction period. Prices in correlated markets are holding up as well. With option expiry coming up in two weeks, we might see increased volatility which could help push prices up. In options, the pattern of the last weeks continues, where puts OI increased and calls for December 2020 expiry decreased. However further down the curve, calls are steadily rising as it appears that market participants expect a lot more upside in EUAs.
German power prices are up 1 EUR/MWh since last week, with the front year contract trading at 40.50 EUR/MWh. API2 coal prices are basically unchanged since last week, with the Cal21 contract trading at 59 USD/tonne. EUR/USD is up 40 points since last week and is currently trading at 1.1910.
Price development of EUA Dec2020 futures contract