EU Market: EUAs set for flat weekly close following wild week

Published 16:11 on December 18, 2015  /  Last updated at 16:11 on December 18, 2015  /  EMEA, EU ETS  /  No Comments

European carbon was little changed late on Friday following a volatile trading week, as the benchmark contract headed for a weekly close in line with last week’s €8.14 settlement.

European carbon was little changed late on Friday following a volatile trading week, as the benchmark contract headed for a weekly close in line with last week’s €8.14 settlement.

The benchmark Dec-16 futures trading on ICE were unchanged at €8.14 by 1600 GMT, after trading in a €8.05-8.23 range.

Volume was light at 7.1 million units traded.

Traders said prices had appeared to stabilise near last week’s closing levels following this week’s volatile trade, which saw the Dec-16s fall to an 11-week low of €7.96 on Monday due largely to speculative profit-taking and automatic stop losses.

Prices then climbed back to €8.31 two days later, a gain of  4.4% that was bolstered by speculators rebuilding long positions and some bargain hunting by utilities.

“Today’s the last day in the office for many people so they’re closing their books down for the year, not taking on any large new positions,” one trader said.

Another said some profit-taking had pushed prices down to their intraday low, but that the decent clean dark spreads had countered and helped lift EUAs.

The moves were amplified by the lack of liquidity typical to this time of year.

The euro clawed back some of its losses posted against the dollar after the US Federal Reserve raised interest rates on Wednesday for the first time in nine years.

This, coupled with softer Rotterdam coal prices, countered weaker German baseload power to lift the German clean dark spreads by between 1-4%.

The front-year spreads are within sight of their year-high due to the strong contango seen on the front end of the coal futures curve.

Meanwhile, no EUA auctions were held on Friday, as government sales are now on hold until Jan. 11.

CERs were unchanged with only the daily futures on ICE trading. Some 16,000 units changed hands at €0.53 each.

By Mike Szabo – mike@carbon-pulse.com

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