Carbon Weekly Newsletter

This newsletter was published 14.2.2024 at 16:19pm CEST

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

Carbon firmly broke 60 EUR level last Friday as a result of growing confidence in relatively low energy prices for at least this year. EUAs have not traded at such low prices since October 2021, when market firstly detected signals of potential energy crisis and soaring prices. Gas and power prices have been trending in downward trajectory alongside EUA, which has been the weakest commodity in the European energy complex. The only energy commodities performing well in current environment remain uranium, crude oil and its derivatives. Crude oil’s resilience may be attributed to robust economic activity in the US which recently reported strong CPI numbers. This resilience might suggest that global economic activity remains strong, despite interest rate hikes during 2022 and 2023. Today, market participants yet again anticipated weekly CoT report, which offered no major surprises. Investment funds continued to increase their short exposure, reaching a historic net short exposure of 38 million tonnes – the highest in the history of EU ETS, since ICE revised historical CoT data. Despite substantial short exposure, market lacks the confidence to attempt a short squeeze, perhaps due to sticky bearish sentiment and belief that any buying activity could soon encounter large number of sellers. Despite intense selling pressure, auctions did not offer substantial discounts. Moreover, the last two of them cleared above secondary market, indicating that there might be some momentary interest to buy at current prices, which could exert some disinflationary effects on the economy.

German power prices are down by 6.50 EUR since last week, with the front year contract trading at 71.70 EUR/MWh. API2 coal prices are down by 5.25 USD since last week, with the Cal-25 contract trading at 89.75 USD/tonne. Front year gas prices are down by 2.585EUR since last week, with the TTF Cal-25 trading at 28.415 EUR/MWh. EUR/USD is down by 60 points since last week and is currently trading 1.0720.

Price development of EUA Dec2024 futures contract

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