EUA prices gained 2.4% on Tuesday, closing at an intraday high of €6.89 after plumbing a new 2015 low earlier on pessimism surrounding whether member states would be able to reach agreement on the design and start of the MSR.

The Dec-15 futures fell to hit a session low of €6.61 earlier, breaking through a technical level that had supported the benchmark contract on several occasions this year, on news that government officials convening in Brussels had failed to find middle ground on the MSR.

“You saw quite a selloff after the news came out about no compromise, but there was very persistent buying and technically also some bullish indicators,” one trader said.

“I think in the end, people who went short (or less long) as a result of the news started to buy back after seeing they ran into resistance on the downside.”

He and another trader added that there was some short-covering and bargain hunting around the €6.60-6.65 level, which was also the lower range of a trading channel in which the contract has been oscillating for months.

Breaking through that level could cause the price to next test support around €6.50, near the contract’s 200-day moving average, which has not been breached since last September.

The second trader added that positive sentiment emanating from reports that the two main groups of member states would continue to hunt for a compromise on the issue also helped lift prices.

Nearly 17.5 million EUAs changed hands under the Dec-15 contract on ICE on Tuesday.

Meanwhile, German Cal-15 baseload power dipped slightly to €32.15 in afternoon trade after trading below €32 earlier.

UK gas for delivery this year and next was firmer, while seasonal contracts expiring in 2017 and 2018 lost ground.

Dec-15 CERs lost 1 cent to 41 cents.

By Mike Szabo – mike@carbon-pulse.com