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This newsletter was published 27.10.2021 at 16:16pm CEST
The current prices on the European carbon market are as follows:
Volatility in carbon has decreased in comparison to the last week. Current market seems to be unsure in which direction it might be heading. It looks like strong selling activity is appearing above 60 EUR, which has acted as resistance for the last fortnight. Some are speculating that early call option buyers could be offloading their positions and locking in some profits before December. On the other hand, EUAs are still trading in long term up-trend and retracements have been absorbed. The main fundamental driver of price action for the past few months, gas, is still trading at higher prices. Worldwide shortage before winter might be creating environment for another push to the upside, and EUAs could react similarly. Even though Russia – the main supplier of gas to Europe – has indicated the exports would increase, there is still some concern regarding Nord Stream 2. The pipeline is currently awaiting regulatory approval and technical inspections. The whole process might take several months, before the pipeline could be in use. Several meteorologists are forecasting long winter, with temperatures below average, which might increase fossil fuel demand. Even though European gas storage levels have been climbing since May, there is a lot less stored commodity in comparison to end of October 2020. The whole situation seems to be bullish catalyst for European energy complex, however gas will still be deciding factor in direction in all energy commodities.
German power prices are down by 4.63 EUR since last week, with the front year contract trading at 121.37 EUR/MWh. API2 coal prices are down by 16.50 USD since last week, with the Cal22 contract trading at 119.50 USD/tonne. EUR/USD is down by 20 points since last week and is currently trading at 1.1620.
Price development of EUA Dec2021 futures contract