Carbon Weekly Newsletter

This newsletter was published 1.7.2020 at 16:21pm CEST

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

EUA prices went vertical last few days and touched levels last seen in August 2019. Strong momentum from last the few weeks continued while many are scratching their heads why. Prices have now covered almost a 100% range since the yearly lows seen end of March. Auctions continue to see solid demand despite the power generation spreads being the worst in a while, which could suggest that speculators are fuelling the move up. There are lots parallels with the 2018 EUA rally and direct comparison would suggest that we are at the top of the range and there is increased chance of a pullback to lower levels. Percentage wise the current leg up is extended, timewise we are due for a pullback and every technical indicator is in overbought territory. However, the question remains how deep of a pullback can we still see in the current year. Levels below 20 EUR/EUA seem very far now, but 24 EUR/EUA could be a reasonable target for the downside in the coming weeks.

German power prices are up 1.10 EUR/MWh since last week, with the front year contract trading at 41.70 EUR/MWh. API2 coal prices have are up 1.00 USD/tonne since last week, with the Cal21 contract trading at 57.25 USD/tonne. EUR/USD is unchanged since last week and is currently trading at 1.1270.

Price development of EUA Dec2020 futures contract
Yours sincerely,
Jan Kresnik 
Carbon Trader

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