European carbon took a breather on Wednesday following two weeks of gains that saw prices rise by as much as 18% to hit a 10-week high of €5.67 on Tuesday.

Front-year EU Allowance futures trading on ICE settled down 5 cents at €5.54 on light volume of 8.7 million units.

The benchmark contract touched its intraday high of €5.63 in the opening minutes, but slid down to the session low of €5.46 just after 0700 GMT.

The Dec-16s climbed back to then drift around the €5.50-5.55 level for most of the rest of the day.

“We reckon we’ll dance around the €5.49 level for a few days, and then see small gains next week with the last of the compliance buying,” one trader said.

EUA prices were unfazed by Germany’s EUAA auction, which cleared at €5.42, some 14 cents below the Dec-16 EUA futures at the time.  The discount was the largest so far this year.

The sale for 857,500 spot aviation allowances attracted bids from 10 participants amounting to 3.36 million units, or a 3.92 oversubscription rate.

Meanwhile, crude oil was slightly lower while German baseload power and European coal were little changed.

By Mike Szabo – mike@carbon-pulse.com