Carbon Weekly Newsletter

This newsletter was published 20.12.2023 at 17:14pm CEST

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

As we approach the year’s end, the market remained range bound following the recent option expiry. Volatility and liquidity have decreased to some extent as we enter the annual auction pause. The activity has shifted to the December 2024 futures contract, becoming the benchmark instrument. During the past week market found significant support level at 69 EUR per tonne, while sellers engaged when market breached the 73 EUR mark for December 2024 futures contract. It took several attempts to break the level to the upside and EUAs trade at 75 EUR mark again. Lack of primary supply was historically at least supportive if not bullish for the prices, and market could be prone to some correction to the upside. Weak fundamentals have driven downward trend in gas and power as well. German power futures for 2024 have recently traded at 86.20 EUR per MWh, marking the lowest level observed since the beginning of the European energy crisis. Similarly, the front month and Calendar-2024 TTF gas futures traded at the lowest prices in nearly two years, ranging between the low and mid-30s. Notably, underground gas reserves, despite the season, sustain robust levels at 88% capacity. The prevailing surplus in supply, coupled with weak demand, has been the main driver for the prevailing bearish trend throughout the year. Despite the bearish sentiment, the energy markets remain much sensitive to the upside, especially if a fundamental change occurs, such as sudden disruption of gas imports. We would also like to take this opportunity to wish you a Merry Christmas and a prosperous New Year in 2024. Due to Holidays, the next Carbon Prices newsletter will be sent in the first week in the next year.

German power prices are down by 2.75 EUR since last week, with the front year contract trading at 89.60 EUR/MWh. API2 coal prices are up by 2.95 USD since last week, with the Cal-24 contract trading at 98.30 USD/tonne. Front year gas prices are down by 1.955 EUR since last week, with the TTF Cal-24 trading at 35.145 EUR/MWh. EUR/USD is up by 170 points since last week and is currently trading 1.0960.

Price development of EUA Dec2024 futures contract

 

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