Carbon Weekly Newsletter

This newsletter was published 11.12.2024 at 16:40pm CEST

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

The price action around the final options expiry of the year was quite exciting, as the market offered a roller-coaster ride in the past couple of sessions. Earlier in the week, sellers took control, driving the market down to monthly lows of 65.93 EUR on heavy volume. At one point, it seemed likely that the significant 65 EUR level tied to the December 2024 options expiry would be reached with ease. However, buyers managed to defend this critical level successfully. Shortly afterward, a significant trend reversal occurred, with gas prices beginning to rise. Due to the positive correlation, EUAs followed and soon broke out of their trading range to the upside. The aggressiveness of buyers overwhelmed sell orders, causing the market to climb rapidly. On the most volatile days of the week, EUAs experienced intraday moves exceeding 3%, making delta hedging before expiry challenging. Sentiment around EUAs has become increasingly bullish over the past month. Investment funds have consistently increased their net long positions, which now exceed 14 million tonnes, according to the latest CoT report. This bullish stance suggests that investors aim to capitalize on the yearly auction pause, set to begin next week. The last auction of the year is scheduled for Monday, December 16, with auctions resuming on Tuesday, January 7. A similar sentiment has been observed in UK Emission Allowances. The market has found support just above 35 GBP per tonne following the final auction of the year. UKA auctions will resume on January 8, with auction volumes for 2025 being reduced by nearly 20% compared to 2024.

German power prices are down by 1.45 EUR since last week, with the front-year contract trading at 94.25 EUR/MWh. API2 coal prices are down by 3.35 USD since last week, with the Cal-25 contract trading at 114.15 USD/tonne. Front-year gas prices are down by 1.435 EUR since last week, with the TTF Cal-25 trading at 43.275 EUR/MWh. EUR/USD is down by 30 points since last week and is currently trading at 1.0490.

Price development of EUA Dec2024 futures contract

 

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