EU Market: Carbon defies energy gains to dip back below €6

Published 18:07 on January 27, 2016  /  Last updated at 13:40 on February 10, 2016  /  EMEA, EU ETS  /  No Comments

EU carbon prices fell in the face of a rising energy complex on Wednesday but kept well above the previous session’s 20-month low in a slightly calmer session than recent chaotic trading days.

EU carbon prices fell in the face of a rising energy complex on Wednesday but kept well above the previous session’s 20-month low in a slightly calmer session than recent chaotic trading days.

The Dec-16 EUA contract ended down 17 cents or 2.8% at €5.93, at the lower end of the day’s €5.79-6.12 range, on heavy turnover of almost 20 million.

The benchmark carbon contract kept some distance from Tuesday’s nadir of €5.61 but it remains down 28.5% on the year, a fall mostly blamed on speculative selling.

The loss came despite oil-led rises across the energy complex, with front-month Brent crude up €1.60 to $33.40 a barrel as speculation mounted that Russia and OPEC producers were considering output limits.

Key coal and power contracts were also higher, boosting German clean dark spreads but breaking the correlation with carbon that some bullish traders had hoped would start to lift EUAs.

The 33-cent trading range was relatively narrow compared to the 50- and 64-cent spans in the week’s two previous sessions, but was punctuated with bursts of trade reflecting nervous dealing as traders try to identify if carbon has hit its short-term bottom.

For the second consecutive session running, the day’s auction was a major point of volatility in the market.

Prices slipped below €6 to fall as much as 12 cents in the minutes after the UK sold 3.4895m spot EUAs for €5.90 each.

The sale cleared around 7 cents below market and with below-average bid coverage of 1.44.

Tuesday’s EU sale saw a similarly weak clearing price and coverage but had little market impact as prices had been bid up aggressively in the minutes before the auction’s bidding window closed.

By Ben Garside – ben@carbon-pulse.com

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