The Dec 24 Carbon EUAs contract last traded at EUR 73.50/t, up EUR 0.24 on the day and above last Friday’s settlement of EUR 72.01/t on Ice Endex. Earlier today, it reached EUR 75.50/t, the highest level since 8 January.
Market participants pointed out that the auction supply was thin due to the Ascension Day holiday on Thursday, and no auction was held today.
The EEX exchange auctioned about 8.5m allowances this week and will offer a total of 12m EUAs next week.
“In the absence of any fundamental drivers, trading most likely reflected technical drivers,” said Imad Barake, EU carbon analyst at Icis.
He said gas market volatility will likely continue to impact EUAs, and the current price move above EUR 75/t could prove to be short-lived.
Independent energy consultant Sergio Giraldo said there appeared to be strong technical resistance around EUR 75/t. He said the market would need to close above that level for several days before testing the next resistance near EUR 86/t.
However, he cautioned that carbon prices could retreat to EUR 60-70/t given the lack of fundamental drivers to sustain the upward momentum.
Falling emissionsA trader at Vertis said that even a break towards EUR 80/t would not be “fundamentally justified,” because EU emissions have remained relatively low this year thanks to renewable energy generation on track for another record year.
Indeed, EU power generation from fossil fuels fell to a record low in April, according to energy think tank Ember.
Last month, the European Commission said EU ETS emissions last year fell by 15.5%, the biggest annual drop since the market’s launch in 2005.
Luyue Tan, senior carbon analyst at LSEG, agreed that fewer auctions and technical buying may have triggered the price gains this week.
“But profit-taking could still pose some risks and gas is quite volatile [with] gas fundamentals quite bearish too,” she said, noting that EUA prices could drop towards EUR 65-70/t.
source: montelnews.com (Jeff Coelho)