This newsletter was published 24.11.2021 at 16:20pm CEST

The current prices on the European carbon market are as follows:

Emission allowances have established a new trading range a month before yearly option expiry. Volatility has been moderate and in line with prevailing market sentiment. Average daily trading volumes have been declining in the past week and are below average. A new all-time high at 73.18 EUR has been reached today, as a result of supporting fundamentals and heavy options buying. Spike above 71 EUR level on Monday was followed by sharp selling activity in the afternoon hours, most likely profit taking from early investors and call buyers. This caused carbon to retrace a bit, however it appears that market is supported on every dip. Auctions in the past week have been strong and in line with secondary market. The only exception occurred today, when smaller Polish auction offered some discount below front month futures contract. EUAs sold off quickly for 1EUR after auction result, but much lower prices have been rejected. Correlations between markets in European energy complex have come down since October, however gas and weather remain the main fundamental drivers behind moves in power and carbon. Meteorologists are forecasting colder temperatures in the following days, which could be interpreted as a bullish catalyst, especially due to gas shortage. Until regulators give green light to Nord Stream 2, Europe could expect continuation of energy crunch.

German power prices are up by 1.00 EUR since last week, with the front year contract trading at 137.00 EUR/MWh. API2 coal prices are up by 19.70 USD since last week, with the Cal22 contract trading at 133.00 USD/tonne. EUR/USD is down by 100 points since last week and is currently trading at 1.1205.

Price development of EUA Dec2021 futures contract