EU carbon prices edged higher on light volume on Wednesday, pulled higher by firmer energy complex, but late selling prevented them from closing above the key €5 mark.
The front-year EUA futures on ICE ended up 8 cents at €4.95, falling from their intraday high of €5.01 in the final hour of trade amid nearly 1 million allowances changing hands.
Total turnover on the contract was low at 8.3 million units, keeping with the recent trend of lighter volumes.
“Carbon seems to be tracking the other commodities again,” one trader told Carbon Pulse.
Brent crude was up $1.15 to $39.89/barrel at the time of writing, while German baseload power gained more than 1% across the board.
However, pricier coal and a softer euro combined to dent German clean dark spreads slightly.
“[Carbon] looks very technically traded at the moment, and most people will be trying to work out the next breakout direction,” the trader added.
Several observers have noted that the Dec-16 EUAs appear to have formed a ‘pennant’ technical formation, with the rightmost tip of the flag aligned with the end of March – just before the EU is due to publish preliminary EU ETS emissions data for 2015.
Pennants are formed during periods of consolidation, and typically end when prices emphatically break out either to the upside or the downside.
Analysts at French investment bank Societe Generale on Wednesday left their forecasts for EUAs unchanged, predicting that the front-year futures would gain some 35% from current levels by year’s end.
Meanwhile, earlier in the day a group of 25 EU member states sold 683,500 spot EUAAs in the bloc’s third auction for aviation emissions allowances this year.
The sale cleared at €4.94, some 3 cents below the Dec-16 EUA futures at 1000 GMT, the time the auction’s bidding window closed.
Eight participants submitted bids worth a total 2.6 million units, with just three traders finding success.
The EU resumes EUA auctions on Thursday, while the next EUAA auction will be held on Apr. 13 by Germany.
By Mike Szabo – mike@carbon-pulse.com
