This newsletter was published 2.2.2022 at 17:18pm CEST

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

Tensions on Russian-Ukrainian border sparked real concerns about stability of the area. The major issue is unpredictability of military action, which appears to be more likely by the day. This uncertainty might have caused some additional pressure on rising carbon prices. Despite aggressive buying in EUA in the morning hours, energy markets remained slow and unperturbed by 4 EUR move in carbon. Aggressive buying caused EUA to reach new all-time high, as benchmark December 2022 futures contract traded at 94.62 EUR. Additional demand could have also come from cancelled auction the day prior. More than 2.4 million allowances, that were not auctioned due to technical issues, will be distributed through next four EU-wide auctions. Even though cancelled auction came as a surprise, cover ratio on next one remained the lowest this year thus far, at 1.13. 100 EUR/EUA target is now just a few percentage points away, as options delta hedging pushes prices higher. EUAs seems to be less affected by bearish weather fundamentals in comparison to other markets in European energy complex, as well. Power and gas experienced 10 percent sell-offs in the past few days, while carbon continued trending higher. Lack of supply at these record high prices could cause continuation of prevailing trend, as there may be less probability for major correction in the current market environment.

German power prices are up by 1.50 EUR since last week, with the front year contract trading at 136.25 EUR/MWh. API2 coal prices are down by 3.55 USD since last week, with the Cal23 contract trading at 112.95 USD/tonne. EUR/USD is unchanged since last week and is currently trading at 1.1290.

Price development of EUA Dec2022 futures contract