European carbon prices ended lower on Thursday due to a weaker energy complex and euro, which were dented by the US Federal Reserve’s decision late on Wednesday to raise interest rates for the first time since 2006.

The benchmark Dec-16s trading on ICE settled down 6 cents at €8.14 on moderate volume of 13.7 million units traded, having oscillated in a 13-cent range.

Activity was healthy down the rest of the futures curve at 7.6 million units, with 130,000 units changing hands on the seldom traded Dec-19s and 20s.

The front-year EUAs were mixed in early trade, but jumped to an intraday high of €8.24 after Thursday’s auction results were published.

In the final auction of the year, a group of 25 EU member states sold 2.82 million spot EUAs for €8.12 each, in a sale that cleared 2 cents above market and attracted total bids worth 10.04 million tonnes.

Prices then drifted lower through the afternoon, with selling pressure picking up in the 30 minutes before market close.  This pushed the Dec-16s to their day’s low of €8.11, but some late buying then lifted them back to as high as €8.17.

The euro lost more than 100 basis points to a two-week low against the US dollar following the US Fed’s decision to raise the benchmark interest rate by 0.25%.

This made coal more expensive for European utilities, even despite a slight drop on ICE’s Rotterdam calendar year futures.

German baseload power prices also softened slightly, contributing to some 3-6% being trimmed from the German clean dark spreads.

No further fresh EUA supply will come to market before government auctions resume on Jan. 11, a factor that some traders said could cause prices to climb amid still-attractive darks spreads and thin holiday period liquidity.

Meanwhile, front-year CERs settled unchanged at €0.49.

By Mike Szabo – mike@carbon-pulse.com