Carbon Weekly Newsletter

This newsletter was published 8.5.2024 at 17:24pm CEST

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

 

EUAs continue to trade in a directionless manner as the market enters a period where bearish fundamentals might prevail. Carbon remains highly correlated to gas and power, which could indicate the extent to which the European energy complex is still reliant on fossil fuels. However, the share of renewable power generation is increasing annually, and consequently, any windy period could lead to price decreases. Despite a bearish outlook and a continuous decrease in the net short position of investment funds, carbon could be supported to some extent by the end of this week. Due to Ascension Day, the EEX has scheduled no auctions until Monday, May 13th. EUAs have encountered significant resistance at around 75 EUR per tonne, while buyers have stepped in after any major dips. It appears that short-positioned participants have seized every possible opportunity to cover their positions in the recent uptrend. European underground gas storages are currently at healthy levels, nearing 65 percent full, which is higher than the five-year average. According to the weekly CoT report, investment funds have closed the bulk of their short exposure compared to the maximum position in late February. The market is approaching a flat position, which could suggest that options may come into play. Open interest for the June option expiry remains largest at strikes below the current market price, indicating a bearish sentiment. However, there has been some interest in the 65 EUR strike and 70 EUR strike as well, possibly due to the simple reason of a range-bound market.

German power prices are up by 2.84 EUR since last week, with the front year contract trading at 93.35 EUR/MWh. API2 coal prices are up by 3.25 USD since last week, with the Cal-25 contract trading at 113.00 USD/tonne. Front year gas prices are up by 1.775 EUR since last week, with the TTF Cal-25 trading at 35.400 EUR/MWh. EUR/USD is up by 70 points since last week and is currently trading 1.0750.

Price development of EUA Dec2024 futures contract

 

Back
Copyright 2024 Belektron d.o.o. All rights reserved

Belektron | The value of your emissions