This newsletter was published 26.10.2022 at 17:32pm CEST

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

For almost two whole months EUAs traded in a narrow range, which resulted in a technical coil pattern and pressure building trading activity. Market kept making higher lows, while failing to break the structure. Sellers were constantly selling small sizes, however auctions were strong and kept market in equilibrium. Earlier this week, after breaching range highs and breaking descending trendline, price of EUA started accelerating up while offering no pullback. There could be several reasons for such activity, especially due to lower gas prices on spot market, which could have sparked buying by utilities, hedging their forward production. Another reason might be aggressive short covering, triggered by improved sentiment on global markets. On the way up market found no real resistance and easily traded through 70 and eventually 75 EUR level respectively. It seems that market still lacks steam to go through 80 as buyers reduced their pace after printing the current monthly high at 78.87 EUR. Even though price rose by almost 10 EUR in two trading days, such moves tend to be at least slightly retraced, especially if there was no big change in underlying fundamentals. Daily auctions still clear at or above prevailing spot price, which could be indicative of firm buying interest, especially when considering high cover ratio that we have seen recently.

German power prices are down by 11.00 EUR since last week, with the front year contract trading at 375.00 EUR/MWh. API2 coal prices are down by 14.00 USD since last week, with the Cal23 contract trading at 231.00 USD/tonne. EUR/USD is up by 280 points since last week and is currently trading 1.0070.

Price development of EUA Dec2022 futures contract