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

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

This page is intended to be viewed online and may not be printed.
As per our terms and conditions, the republication or redistribution of Carbon Pulse content can result in the suspension or termination of your subscription.