EU Market: EUAs rebound from early 2% dip after strong auction

Published 16:51 on June 1, 2015  /  Last updated at 15:03 on May 11, 2016  /  EMEA, EU ETS  /  Comments Off on EU Market: EUAs rebound from early 2% dip after strong auction

EU carbon recovered from early losses on Monday after a strong auction result helped push prices back into a long-term upward trading channel.

EU carbon recovered from early losses on Monday after a strong auction result helped push prices back into a long-term upward trading channel.

The benchmark Dec-15 EUAs fell as much as 14 cents or 1.9% to €7.21 ahead of the auction.

The EU’s sale of 2.918 million spot EUAs cleared just after 0900 GMT some 2 cents above market at €7.23, with a bid-to-cover ratio of 2.62.

This helped prices recover somewhat, and by 1420 GMT they were trading at €7.32 – still 4 cents below Friday’s ICE settlement – on steady if unremarkable volume of around 6 million units.

Last week, prices traded within a €7.18-7.44 range, for a time dropping to a month-low below a 60-cent upward sloping technical channel with a lower band in the mid-€7.20s.

Analysts at Thomson Reuters expect prices to trade between €7.19-7.40 this week “with a slight upward bias” amid a lack of political drivers, they said in a note.

They highlighted a crunch June 5 deadline for Greece to make loan payments as a key macro-economic event to watch, along with this week’s OPEC meeting, which is expected to roll over current oil production rates.

The main upcoming EU ETS-related political driver is the publication of the ETS review, which last Thursday Europe’s climate commissioner Miguel Arias Canete said might not be ready as expected before August, Reuters reported.

Yet on Monday, Maros Sefcovic , the Commission’s vice-president for energy union and superior to Arias Canete in the Commission’s new hierarchy, told a conference in Riga that the intention was still to publish before the August summer break.

This week’s carbon auctions are scheduled to inject just 9 million EUAs into the market, down from 12.2 million last week. Sales will be held on Tuesday and Friday on EEX, with Thursday a public holiday in Germany.

“This should make the market short and it is possible there is some further upward pressure on the price,” said trading and brokerage firm Redshaw Advisors in a weekly note.

They added that any gains this week might be short-lived because the following week will see a return of near-maximum weekly volume this year of 15 million.

By Ben Garside – ben@carbon-pulse.com