Carbon Weekly Newsletter

This newsletter was published 18.10.2023 at 16:54pm CEST

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

European carbon prices remained relatively stable in the past few days, despite a rally that occurred mid last week and lasted until Friday. EUAs traded as high as 86.60 EUR for December 2023 futures contract, before reversing their course. All attention today was yet again paid to Commitment of Traders (CoT) report, which showed a surprising change in positioning. Investment funds are overall convinced that the market should go lower and are still positioned accordingly. However, the most surprising piece of data has been the massive reduction of exposure. The net short position from a week ago has been decreased by over 12 million allowances, with today’s report indicating it stands at only 10 million allowances of net short. This reduction suggests that funds are beginning to close out a significant portion of their positions ahead of the winter and any potential price spikes. EUAs have been trading calmly today in the morning hours, however a massive selling pressure occurred after UK ETS auction result had been published. UKAs cleared below prevailing spot market, which might indicate that recent up-trend might be running out of steam. It all appears that both markets might be continuing trending lower, primarily due to bearish fundamentals. However early winter or large reduction of wind power generation could provide some support for carbon prices.

German power prices are up by 2.60 EUR since last week, with the front year contract trading at 130.60 EUR/MWh. API2 coal prices are up by 9.75 USD since last week, with the Cal-24 contract trading at 137.75 USD/tonne. Front year gas prices are up by 8.900 EUR since last week, with the TTF Cal-24 trading at 55.100 EUR/MWh. EUR/USD is down by 75 points since last week and is currently trading 1.0540.

Price development of EUA Dec2023 futures contract

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