This newsletter was published 12.6.2024 at 17:09pm CEST

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

A week before the quarterly option expiry, EUAs seem to have stabilized around 70 EUR per tonne. This level has significant open interest, especially on the call side, which could be one of the reasons for strong support around this important price point. It appears that option activity and delta hedging will be the main drivers of price action for the next week, potentially influencing fundamentals and volatility to some extent. The attention paid to weekly CoT data has subdued quite a bit over the months. However, it is worth noting that investment funds have started to scale out of their long exposure while leaving their net position almost entirely unchanged. The overall position showed a net short exposure of nearly 10 million EUAs, up by roughly 2 million from a week ago. Other markets in the European energy complex have been trading higher as well, possibly due to reports that Uniper formally ended the contract with Gazprom for Russian gas. It is important to note that Uniper has not been receiving gas from Gazprom since 2022. In contrast, the UK carbon market has shown almost completely different price action. UKAs continue their bullish momentum towards 50 GBP per tonne, following a strong breakout above 40 GBP for the December 2024 futures contract. Despite the second-lowest cover ratio in 2024, the auction cleared at a premium to the secondary market, triggering firm buying interest afterward.

German power prices are up by 0.70 EUR since last week, with the front year contract trading at 93.55 EUR/MWh. API2 coal prices are down by 4.00 USD since last week, with the Cal-25 contract trading at 119.00 USD/tonne. Front year gas prices are up by 1.250 EUR since last week, with the TTF Cal-25 trading at 37.150 EUR/MWh. EUR/USD is down by 30 points since last week and is currently trading 1.0850.

Price development of EUA Dec2024 futures contract