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This newsletter was published 20.7.2022 at 17:21pm CEST
The current prices on the European carbon market are as follows:
Selling pressure in EUAs has been prevailing for the past few days, as gas supply remains increasingly uncertain. With mixed fundamentals, it was relatively easy for market to break technical structure which was providing strong support for several weeks. EUAs are already trading below 80 EUR, levels last seen in mid-June, with option open interest of 27 million allowances for September and December 2022 expiries combined. For the better part of the year, price has been oscillating around mentioned price point, suggesting there has been a consensus so far. Recent auctions have offered at least some discount below secondary market, however, cover ratios have mostly been above factor two, meaning that buyers are there but are not in a rush to buy. Heatwave and lack of precipitation are in no favour of power generation from hydro power plants, as well as nuclear. Temperature of some major European rivers rose to alarming heights. Increased consumption of energy for air conditioning during the summer might lead to increased demand for carbon emission allowances, however if gas flows remain low and unstable, the outlook could be less bullish due to demand destruction.
German power prices are down by 31.50 EUR since last week, with the front year contract trading at 326.50 EUR/MWh. API2 coal prices are down by 24.50 USD since last week, with the Cal23 contract trading at 260.00 USD/tonne. EUR/USD is up by 200 points since last week and is currently trading 1.0200.
Price development of EUA Dec2022 futures contract