This newsletter was published 6.12.2023 at 16:14pm CEST

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

Bears have been in control for the last couple of months, as EUAs break another key support level effortlessly. Consistent dips to new yearly lows have become routine, indicating a potential further decline in carbon prices. The broader European energy sector has experienced a downturn owing to weakened fundamentals. Factors like sufficient gas reserves, robust renewable energy output, mild weather, and subsequently reduced demand have collectively driven carbon prices to levels last witnessed back in October 2022. Adding to the bearish sentiment, investment funds have once again increased their net short exposure, expressing the belief in continued bearish market conditions. Despite the nearing final option expiry for 2023, it appears that the market has no intent to trade at the strike with the largest open interest, at 80 EUR. Furthermore, the annual auction pause in 12 days could potentially impact pricing dynamics and, notably, liquidity. A similar downtrend trajectory has been evident in UK emission allowances, marking fresh all-time lows at 33.10 GBP per tonne for the December 2023 futures contract. It seems that the energy complex might continue to trend in downward trajectory, currently with limited upside, especially if fundamental circumstances remain unchanged.

German power prices are down by 4.65 EUR since last week, with the front year contract trading at 102.05 EUR/MWh. API2 coal prices are up by 2.75 USD since last week, with the Cal-24 contract trading at 110.50 USD/tonne. Front year gas prices are down by 2.005 EUR since last week, with the TTF Cal-24 trading at 39.850 EUR/MWh. EUR/USD is down by 180 points since last week and is currently trading 1.0790.

Price development of EUA Dec2023 futures contract