This newsletter was published 26.1.2022 at 15:52pm CEST

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

Carbon emission allowances keep trending higher, despite mixed signals. Market is currently trying to reach levels above 90 EUR again, after rebounding from around 80 EUR. It seems that participants favour bullish part of fundamentals, especially tensions on border between Russia and Ukraine. Many are speculating that destabilisation of the area could cause severe reduction in gas imports to Europe, which would put even more pressure on tight gas supply. Although liquified natural gas is currently shipped to European ports in insufficient quantities, it is unreasonable to expect more imports form the Middle East. The reason lies within long term contracts the largest exporters of LNG have with Asian countries. Qatar, the largest exporter, has already fully booked capacities and is, at the moment, unable to produce larger quantities. On the other hand, weather conditions remain slightly bearish. Warmer forecast and wind production could provide some selling pressure, especially due to lower power consumption and higher generation from renewables. In the past week many energy commodities performed well, which was quite the opposite to global equity markets. Sentiment in major markets is turning bearish, however EUAs remain in line with markets in European energy complex. It all seems that demand might be created by real economic activity and not only inflationary central bank policies.

German power prices are up by 18.75 EUR since last week, with the front year contract trading at 134.75 EUR/MWh. API2 coal prices are up by 11.00 USD since last week, with the Cal23 contract trading at 116.50 USD/tonne. EUR/USD is down by 50 points since last week and is currently trading at 1.1290.

Price development of EUA Dec2022 futures contract