This newsletter was published 02.10.2024 at 16:53pm CEST

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

A bearish trend in carbon persists, despite the strength observed in the market last week. In the days following the third quarterly option expiry, EUAs began trading above 65 EUR per tonne, reaching a local high of 66.97 EUR for the December 2024 futures contract on Monday. However, the bullish momentum soon faded as fundamentals took over. The escalation of the conflict between Israel, neighbouring countries and Iran caused some caution, especially due to potential damage to the gas infrastructure. Majority of energy markets reacted to the news and initially traded higher, but momentum was quickly lost, likely due to reassurances that the Israeli pipeline remains operational. Such events can disrupt global energy supply and, consequently, drive price increases in the European energy complex. Major market participants still hold net short exposure in EUAs, making the market more sensitive to bullish changes in fundamentals and vulnerable to short squeezes, which were more common during the summer of last year. Despite these factors, investment funds reduced their net short exposure by almost a third, suggesting either rising risks in energy markets or profit-taking. Currently, European gas storage levels are nearly 95% full, which could be seen as a bearish signal. However, the risks of gas supply interruptions remain significant, and any broader geopolitical event could have notable price implications.

German power prices are up by 0.54 EUR since last week, with the front-year contract trading at 86.70 EUR/MWh. API2 coal prices are up by 3.75 USD since last week, with the Cal-25 contract trading at 122.50 USD/tonne. Front-year gas prices are up by 1.240 EUR since last week, with the TTF Cal-25 trading at 38.810 EUR/MWh. EUR/USD is down by 110 points since last week and is currently trading at 1.1040.

Price development of EUA Dec2024 futures contract