EU Market: After hitting 3-wk high, EU carbon falls on technical selling, energy

Published 18:48 on October 7, 2015  /  Last updated at 15:19 on May 11, 2016  /  EMEA, EU ETS

European carbon prices fell on Wednesday after hitting a three-week high, as technical selling and profit-taking throughout the energy sector weighed.

European carbon prices fell on Wednesday after hitting a three-week high, as technical selling and profit-taking throughout the energy sector weighed.

Front-year EU Allowance futures trading on ICE Futures Europe settled 11 cents lower at €8.11 after sinking as low as €8.06 in the final 20 minutes of trade.

The benchmark contract touched €8.27 early in the session, but failed to break through that mark, which some analysts have identified as technical resistance.

The Dec-15s have tried to penetrate the €8.24-8.27 level seven times since Sep. 15, and traders said the latest unsuccessful attempt contributed to today’s selling.

One market participant said that profit-taking seen across the European energy complex had also helped pull carbon lower.

The front-year EUA futures had risen over five of the past six days, posting a 5% gain between their intraday low of €7.87 of Sep. 29 and today’s peak.


Coal for delivery in Europe next year lost more than 50 cents on ICE, closing at $49.25/tonne after briefly climbing back above $50 for the first time since last September.  The forwards had gained almost $2 over the past week since hitting multi-year lows near $48/tonne earlier this month.

Calendar 2016 German baseload power closed at €29.43/MWh on EEX after trading up to €29.75 earlier in the day. That contract has also recovered by roughly €1 since hitting a 12-year trough near €28.50/MWh last week.

Crude oil prices also slid after weekly inventory figures showed US stockpiles were at a record, and this also appeared to lean on the European energy complex.

The German clean dark spreads were boosted by these factors and a stronger euro, rising by between 9% and 12% to their highest levels in several weeks.

This, one trader postulated, would help lift EUA prices tomorrow, with the €8.10 mark acting as technical support early on.

Volume was moderate at 11.5 million units traded on the Dec-15 EUAs, with a further 4.8 million changing hands along the rest of the curve.  That included more than 1 million done on each December contract for expiry between 2016 and 2018.


Germany on Wednesday sold 781,500 spot EUAAs for €7.97 each, in an auction that attracted bids worth a total 3.7 million units from 14 participants and cleared 22 cents below the front-year EUA futures.

The discount was the smallest since Poland’s March EUAA auction.

Larger-sized auctions return on Thursday when the EU will sell 2.92 million units, potentially meaning more bearish pressure for EUAs.


Meanwhile, CER prices climbed to yet another two-year high, touching €0.66 before slipping back to settle down a cent at €0.61.

At 180,000 credits changing hands, turnover was lighter than recent days.

A further 168,000 units were traded on the Dec-16s, which settled two cents lower at €0.52, maintaining the steep backwardation seen at the front of the futures curve since the end of September.

One trader said the rise may be due to a few companies with remaining Kyoto unit usage quotas buying the credits, which compared to EUAs represent a significantly cheaper compliance option.

Another noted that there remain few sellers in the market, so even light demand could cost the price to climb several cents, while a third market participant said the recent rise, which has seen the front-year futures gain more than 20% since Sep. 29, may also have been fuelled by short-covering.

By Mike Szabo –