This newsletter was published 15.9.2021 at 17:22pm CEST

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

In the last week before quarterly option expiry volatility has increased. For a few days it seemed that EUAs were trying to reach 65 EUR level as strong buying in the whole energy complex continued. Nearly all commodities rose even higher, while EUAs remained range bound during past week. What might be position unloading, has created one-sided market, with strong bearish impulses every day. Support at 60 EUR has been broken and the market managed to close below 60 EUR for the first time in the last 10 days. Many participants believe the whole action is caused by profit taking activity, especially long call holders. That might be the case, especially due to large open interest at 60 EUR strike for September and December maturities. On the other hand, the cause of sell-off could be contributed to erroneous news about Spain selling additional EUAs. The most important energy commodities remain up-trending, especially coal and gas. The latter has experienced a big supply squeeze, most likely due to long winter last year, subsequently empty gas reserves and fuel switching power generation. All together has been working in favour of EUAs so far and until a fundamental change takes place, trends in European energy complex might continue. Trading volumes have been healthy for the last few weeks, since more than 20 million EUAs in Dec-21 were exchanged on average trading day.

German power prices are up by 9.90 EUR since last week, with the front year contract trading at 103.50 EUR/MWh. API2 coal prices are up by 5.60 USD since last week, with the Cal22 contract trading at 128.40 USD/tonne. EUR/USD is unchanged since last week and is currently trading at 1.1810.

Price development of EUA Dec2021 futures contract