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This newsletter was published 14.12.2022 at 17:04pm CEST
The current prices on the European carbon market are as follows:
Last quarterly option expiry of the year was quite uneventful, despite strong selling pressure that started in the morning. Massively increased volatility due to options activity and political deal regarding RePowerEU that was struck this morning, sent prices south and EUAs transacted as low as 84.76 EUR for December-22 futures contract. The fundamental news came from Strasburg this morning, reporting that EU legislators reached a provisional deal to accelerate exit of dependency on Russian fossil fuels, especially gas and crude oil. Sources suggest that the whole package should be worth around 300 billion EUR, with various sources of financing. 20 billion is expected to come from EU ETS, out of which 50 percent from Innovation fund, 40 percent from frontloading ETS allowances on upcoming auctions and 10 percent from Market Stability Reserve. Despite some bearish news EUAs still hold above 85 EUR level as market remains to be supported by short-term fundamentals. Colder weather is persisting in Central and Eastern Europe, which is driving fossil fuel demand and consequently demand for EUAs. Long term technical indicators might suggest there is some support for carbon, as market still trades well above 200 and 50 daily moving averages.
German power prices are down by 62.50 EUR since last week, with the front year contract trading at 325.50 EUR/MWh. API2 coal prices are down by 37.00 USD since last week, with the Cal23 contract trading at 225.00 USD/tonne. EUR/USD is up by 150 points since last week and is currently trading 1.0650.
Price development of EUA Dec2022 futures contract