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This newsletter was published 31.5.2023 at 17:36pm CEST
The current prices on the European carbon market are as follows:
Market has been trending down for quite some time, since bearish fundamentals prevail as the strongest driving force in the market. Week-on-week price fell by more than 5 EUR, with sellers being in control most of the time. Despite persistent selling pressure, every price point on a way down appeared to be full of bids and therefore market moved non-aggressively. To illustrate how big short positioning has gotten in the meantime, we can use CoT (Commitment of Traders) data, published by ICE exchange every week. Net exposure of financial funds has increased to 13.7 million allowances, the largest net short position since exchange started to publish it in 2018. Almost immediately after the figure became publicly available, market started to go up, as buying side attempted a short squeeze. The initial pump was aggressive, however EUAs stabilised just above 80 EUR per tonne afterwards, a strong psychological level and important price point due to large open interest for June option expiry. It should not come as a surprise if EUAs find support at current levels, despite trading well below 200-day moving average. Other markets in European energy complex have been trending down in the last week. The main reasons are still low gas prices due to sufficient short-term supply, mild temperatures and overall good hydrology. Macroeconomic environment appears to be cooling down as well, which might affect power, carbon and gas prices.
German power prices are down by 10.24 EUR since last week, with the front year contract trading at 124.51 EUR/MWh. API2 coal prices are down by 7.00 USD since last week, with the Cal-24 contract trading at 96.50 USD/tonne. Front year gas prices are down by 5.645 EUR since last week, with the TTF Cal-24 trading at 44.605 EUR/MWh. EUR/USD is down by 120 points since last week and is currently trading 1.0660.
Price development of EUA Dec2023 futures contract