Carbon Weekly Newsletter

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

The first quarterly option expiry of the year was quite uneventful, as less than 1 million tonnes traded during the settlement window for December 2024 futures contracts. For the better part of the last month, prices revolved around the 55 EUR level, which has been of great importance for several years. In 2021, EUAs broke out of a trading range and 55 was the upper band, before the market continued to 80 EUR. In February 2022, amidst the escalation of the Ukrainian and Russian conflict, the 55 EUR level provided strong support, and now March 2024 options settled right around that level, at 55.74 EUR. Auctions in the past week cleared quite strongly, which has been in line with averages of the year. Despite Monday’s offering some discount, the EU auction on Tuesday cleared 50 cents above prevailing spot prices. Even today, the Polish auction cleared a premium to the secondary market, with a healthy cover ratio. Despite these bullish signals, prices retreated, which could be due to long-term bearish sentiment and fundamentals, which have been the main drivers of markets in the European energy complex. Front-month TTF gas has been trading around 25 EUR per MWh, while front-month German power traded around 55 EUR per MWh. Sideways range could be observed in UKAs as well. The market has been moving similarly to EUAs, however, today came with a slight change. According to the CoT report, investment funds switched exposure in UKAs and now hold roughly 400 thousand tonnes net long position. Alongside relatively depleted gas storages, this might have been one of the reasons behind the support during the past week.

German power prices are down by 6.105 EUR since last week, with the front year contract trading at 73.65 EUR/MWh. API2 coal prices are down by 5.75 USD since last week, with the Cal-25 contract trading at 105.25 USD/tonne. Front year gas prices are down by 1.895 EUR since last week, with the TTF Cal-25 trading at 28.905 EUR/MWh. EUR/USD is up by 40 points since last week and is currently trading 1.0940.

Price development of EUA Dec2024 futures contract

 

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