European carbon prices edged higher on Monday amid low volume as coal fell and the euro gained, and as data showed German emissions likely rose this year.
The Dec-16 EUA futures were up 9 cents at €8.22 by 1617 GMT, a cent shy of the day’s high.
Volume was light at 4.6 million units traded.
The euro strengthened against the US dollar, making already weaker Rotterdam coal prices even cheaper, and that combined with flat German baseload power prices caused the clean dark spreads to firm.
Energy-related CO2 emissions in Germany, the largest emitter in the EU ETS, rose by 0.9% in 2015 due to increased demand and more burning of lignite and natural gas, according to estimates by an energy market research group.
However, analysts were slightly bearish in their year-end views.
Bernadett Papp, an analyst with Vertis in Budapest, said the technical picture for EUAs “looks gloomy, with the MACD in the negative territory and the 200-day moving average luring the price to €7.92.”
“The RSI at 33 points, however, suggests that the price is close to oversold territory and might climb higher,” she added.
“Should the lack of auctions support the price, the 100-day moving average at €8.37 might stand in the way of appreciation.”
Redshaw Advisors said any speculators left in the market are expected to close their remaining short positions, if they haven’t already, to avoid being caught out in a price reversal, potentially as utilities take advantage of German clean dark spreads trading near their highest level in more than a month.
“EUAs seem to have carved out a support base at or around €8.15 and the mild weather can presumably now only surprise to the upside because it is hard to believe it can get any warmer at this time of year,” they said.
“Following the large price correction and auction shutdown it is possible that we see some strength in the carbon price this week,” they added.
“However, the closer we get to Christmas the thinner the market will become, which leaves it vulnerable to price swings in either direction as market depth is tested by moderate buying (e.g. last minute Christmas purchases) or selling (e.g. mild weather forecast to continue well into the New Year).”
By Mike Szabo – firstname.lastname@example.org