Carbon Weekly Newsletter

This newsletter was published 20.1.2021 at 19:01pm CEST

EUA price is nearly unchanged but volatility increased. Price moves on gas markets last week caused increase in volatility on basically all energy assets. Prices first rallied but then backed off the highs. EUAs were no exception. However, while this week started near the lows, after a big sell-off on Friday, the move was undone today and market is back at the higher end of the range. This goes hand in hand with observations of increased options activity. Since last week we spotted 21 million EUA of open interest increase on all maturities traded on ICE. Most of that activity was in favour of puts with calls contributing only a quarter of the volume. If we add those numbers on top of the 27 million EUA increase since the beginning of the year until last Wednesday, the huge activity adds to the increased volatility. With equity markets rallying and almost all commodity prices at multi year highs, there is little doubt that we are in a very bullish market sentiment and EUAs may soon revisit their yearly highs around 35 EUR/EUA.

German power prices are down 0.50 EUR/MWh since last week, with the front year contract trading at 50.00 EUR/MWh. API2 coal prices are down 4.55 USD since last week, with the Cal22 contract trading at 68.80 USD/tonne. EUR/USD is down by 50 points since last week and is currently trading at 1.210.

Price development of EUA Dec2021 futures contract


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