EU carbon prices lifted on Tuesday after a strong auction result and shrugged off a surprise eleventh-hour move from debt-riddled Greece to escape a default.
Dec-15 EUAs ended up 8 cents at €7.45 on ICE after trading in a €7.35-7.53 range on modest volume of around 9 million units, around half of Monday’s volume.
Carbon climbed as much as 7 cents shortly after the EU’s spot auction cleared at €7.36, one cent above market, though the bid-to-cover ratio of 2.99 was in line with June’s average.
The gains pushed EUAs further from the previous session’s near one-month low of €7.25, when prices plunged on fears about the impact of Greece exiting the euro zone.
Greek-related developments again rocked financial markets on Tuesday, with major equity indices tumbling as other eurozone leaders appeared unimpressed with a surprise call for further bailout cash by Athens.
Yet this time carbon was relatively stable.
“I’m surprised how little effect Greece has had on the EUA price,” said one trader, bruised from a volatile Monday session.
Carbon market analysts had suggested that Monday’s fall was likely overdone and predicted carbon could even rise in the coming days.
The wider energy complex provided a bearish signal on Tuesday.
A jump in European coal prices combined with a softer euro and firmer EUA prices knocked between 6% and 9% of German calendar-year clean dark spreads, pushing them back towards multi-month lows touched last week.
Calendar-year power prices remained relatively flat amid increased prospects of a spike in near-term demand due to a looming heatwave across much of Europe.
By Ben Garside – firstname.lastname@example.org