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This newsletter was published 10.5.2023 at 16:45pm CEST
The current prices on the European carbon market are as follows:
EUAs have been range bound for quite some time, after sharp drop in late April. Move to the downside might look quite overextended especially since it did not offer any major pullbacks. Market fell in almost a straight line, until it started to form a bottom at around 85 EUR per tonne. Corrections to the upside were reverted with ease, while patient buyers stepped in when market fell below 85 EUR. Everything changed dramatically when EUAs started to show less and less signs of weakness on Friday and earlier this week. Several strong auctions in a row could have meant that buyers are patiently waiting for right opportunity. Short sellers, on the other side, might be looking to cover at least a part of position before selling again at higher levels and this combined could be ripe for a short squeeze. EUAs have started aggressively moving to the upside on Tuesday afternoon, just a few hours before the market close. The move was supported by volume and all willing sellers sold easily into the strength. Technical breakout to the upside continued today as well. Market opened firmly and went higher almost every hour, along with power and crude oil. Despite all mentioned reasons, market sentiment does not appear to be bullish, especially due to weakening European economy and still strong ongoing inflation. EUAs could therefore remain range bound, with sudden moves in both directions, until major news or change starts a new trend.
German power prices are up by 6.50 EUR since last week, with the front year contract trading at 150.00 EUR/MWh. API2 coal prices are down by 10.25 USD since last week, with the Cal-24 contract trading at 124.75 USD/tonne. Front year gas prices are up by 1.275 EUR since last week, with the TTF Cal-24 trading at 56.260 EUR/MWh. EUR/USD is down by 60 points since last week and is currently trading 1.0990.
Price development of EUA Dec2023 futures contract