European carbon eased on position rolling and slightly weaker fundamentals, but prices climbed back from a new one-month low touched early on Thursday, lifted by a second straight strong auction result.
Front-year EU Allowance futures on ICE settled down 4 cents at €8.36 after falling to as low as €8.29 twice in the first two hours of trade.
Volume on the benchmark contract was heavy at 35 million units, most of which was linked to position rolling.
A further 42 million units changed hands across the rest of the futures curve, resulting in total volume of 77 million, which makes Thursday amongst the busiest trading days seen on ICE’s EUA contracts this year.
Prices have closed lower in four of the past five trading sessions, and while the Dec-15 contract temporarily fell below its lower Bollinger Band, it managed to settle a cent above it.
The futures’ technical weakness could also be seen on its Relative Strength Index (RSI), which hit the 40-mark today – the lowest level since late September and some 10 points above the threshold for an instrument being considered oversold.
The Dec-15s are now 4% below their 2015 high of €8.71 hit on Oct. 29, nearing a key technical support level around €8.25-8.29.
Softer German power and a slightly weaker euro also put downward pressure on EUAs, trimming around 2% off the German clean dark spreads.
But carbon was supported by Thursday’s auction.
A group of 25 EU member states sold 2.918 million spot EUAs for €8.32 each, in a sale that cleared a cent below market – the smallest discount seen in an EEX-hosted auction since Nov. 26.
The UK auction on Wednesday cleared 2 cents above market, compared to the average 3-cent discount recorded in the rest of December’s sales.
Thursday’s sale attracted 21 participants – the most in three weeks – who collectively submitted bids worth a total 10.14 million allowances – the highest since late November.
Germany will sell 3.182 million EUAs on Friday in its final auction of 2015.
Governments are due to sell a total 11.84 million units in the year’s final four auctions.
Meanwhile, CERs continued to slide, with the front-year futures settling a cent down at €0.56 – the lowest settlement since Oct. 5.
By Mike Szabo – mike@carbon-pulse.com
