EU Market: EUAs drift further from 3-year peak

Published 17:59 on October 28, 2015  /  Last updated at 18:00 on October 28, 2015  /  EMEA, EU ETS  /  No Comments

EU carbon fell for the second consecutive session on Wednesday amid thin auction demand as bullish traders remained quiet despite a favourable energy complex.

EU carbon fell for the second consecutive session on Wednesday amid thin auction demand as bullish traders remained quiet despite a favourable energy complex.

The Dec-15 EUA contract settled down 4 cents at €8.57 on ICE, near the middle of the day’s €8.53-€8.63 range, on healthy volume of 17 million, 9.2 million of which was block trades.

Turnover was also heavy further along the curve, with 7.5 million going EFP on the Mar-16s and a total of 10.6 million and 5 million respectively on the Dec-16 and Dec-17 futures.

Today’s losses follow Tuesday’s 5-cent decline on the front-year futures following a several days of gains that added almost 5%, set a fresh three-year peak of €8.70, and left the contract in overbought territory.

“The upward trend is not broken but the recent gains looked a bit overdone,” said Bernadett Papp, an analyst at brokers Vertis, pegging the nearest technical support level at €8.50.

Analysts said prices were likely consolidating in a new range between €8.30 and €8.80 after having climbed to levels not seen since Nov. 2012.

The UK’s sale of 3.1 million spot EUAs cleared 3 cents below secondary prompt prices and with a bid-to-cover ratio of 1.74, attracted the lowest bid coverage since July 31.

In contrast, the energy complex gave a signal that could encourage utilities to buy carbon.

The German clean dark spreads for 2016, 2017 and 2018 rose 4-6% as baseload power prices ticked higher while carbon and coal fell. The euro also strengthened, making coal imports even cheaper.

By Ben Garside – ben@carbon-pulse.com

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