EUAs slipped for a third consecutive session on Tuesday but recovered after briefly breaking below technical support levels that could trigger further selling and push prices towards their recent lows.
The front-year EU Allowance futures on ICE settled down 5 cents at €4.83, near the middle of the day’s narrow €4.75-4.91 range. Turnover was muted at just under 12 million.
Compared to wider financial markets, carbon felt little impact from the Brussels terrorist attacks early on Tuesday that killed at least 30 people.
The Dec-16 contract briefly showed technical weakness by falling several times below the lower limit of both its recently-formed ‘pennant’ formation and its Bollinger Band around €4.81, but prices managed to climb back to close above those levels.
Analysts at Energy Aspects echoed the views of other market watchers this week in giving a neutral outlook for EUA prices.
“The market really has no strong drivers to move on as there is little fundamental push in either direction,” they said in a weekly report on Tuesday, citing a balance between limited auction supply and lower utility demand due to warmer weather.
Market reaction to today’s EU auction was also minimal, with the sale clearing 2 cents below market at €4.80 on low bid coverage of 2.14.
The energy complex gave a slightly bullish signal for carbon, with German clean dark spreads rising mainly due to a drop in coal prices.
The Cal-17 ARA coal contract settled down 2.4% to $41.36 a tonne on ICE, outpacing crude oil, which recovered from an early fall attributed to the Brussels attacks.
The deadly explosions that triggered security alerts across western Europe caused a wider fall in global equity markets, as investors switched to safer havens such as gold and government bonds.
By Ben Garside and Mike Szabo – firstname.lastname@example.org