EU carbon prices dropped for the second consecutive session on Tuesday as traders sold their bullish bets made in expectation of a technically-driven rally amid caution over Greece-induced market turmoil.

The Dec-15 EUA ended down 10 cents at €7.45 on ICE, where around 11 million units changed hands as the contract traded in a €7.43-7.57 range.

This, coupled by the previous session’s 9-cent loss, almost totally wipes out the previous week’s gains.

The repeated testing of the €7.64 resistance level last week and this week, amid technical signals that prices could emphatically break out of their narrow trading range, had caused market watchers to place bets in expectation of a big move.

Traders continued to keep a close watch on developments over Greece’s debt crisis. Greek PM Alexis Tsipras on Tuesday dubbed the IMF ‘criminals’ while Finland’s PM Juha Sipila said it would take a miracle to get a deal before Greece’s bailout terms expire at the end of the month.

“Greece doesn’t seem to have any impact so far, but if it really exits the euro I do expect some downward movement (in EUAs),” said one trader.

The EU’s sale of 2.9 million spot EUAs cleared one cent above market at €7.48 with a bid-to-cover ratio of 4.39, well above the 3.1 average ratio in auctions over May and June and 2015 average to date of 2.2.

No auction will be held tomorrow due to a regular fortnightly gap in the sales calendar.

By Ben Garside – ben@carbon-pulse.com