EU carbon prices climbed 1.7% on Monday to a fresh two-month high as traders bet that lawmakers would clinch a deal to strengthen the MSR this week.
By 1500 GMT, the Dec-15 EUA was up 13 cents at €7.65 on ICE, close to the day’s top trade of €7.67 and nearing the year’s peak of €7.90 hit on Feb. 16.
Traders said prices were gaining in anticipation that Tuesday’s trilogue meeting between the three EU institutions would bring to an end substantive discussions on the MSR.
The measures wouldn’t curb the market’s massive oversupply for at least another three years but a deal would drastically reduce the risk of prices falling from current levels and could encourage compliance buyers to the market.
The EU Council last week aligned its views closely to that of the Parliament by agreeing the MSR should start in 2019 and be filled with backloaded and unallocated EUAs.
“A positive outcome of the trilogue negotiations might help the price retesting 2015 high at €7.90, but a correction might be in the cards after that as speculators might opt for profit-taking and there won’t be any compliance buyers supporting the price,” said analyst Bernadette Papp of brokers Vertis in a weekly market comment.
“We therefore expect declining prices in the second half of the week after the initial appreciation.”
AUCTION GAP
Monday’s price uptick came amid thin turnover of less than 6 million units.
Germany-based exchange EEX had no scheduled auction today due to a UK public holiday, the second consecutive session without a governmental sale following a holiday in continental Europe on Friday.
EU governments are due to auction just over 9 million spot EUAs across each of the four remaining trading days this week, down from the 11.9 sold last week and below the 2015 weekly average of 12.65 million.
EU DATA DELAY
Technical problems meant the European Commission did not publish data on how many UN offsets ETS participants had converted to EUAs for 2014 compliance.
“The publication of data concerning international credits (Certified Emission Reductions and Emission Reduction Units) due to be published at 12:00 CEST has been delayed due to technical reasons,” the Commission said in a statement on its website.
“We apologise for any inconvenience. The information will be posted at 18.30 CEST at the latest,” it added.
Analysts from Thomson Reuters and Energy Aspects expect emitters to have converted between 225-250 million offsets as companies opt to use up most of their remaining entitlement.
The data could give an indication of future demand for both EUAs and CERs but some traders think only a drastic shift from analyst expectations could trigger any price reaction.
By Ben Garside – ben@carbon-pulse.com
