EU carbon prices lost steam on Tuesday and ended lower after hitting a fresh five-month high on mainly speculator-driven volume.

The benchmark Dec-15 EUA futures closed down 6 cents at €7.74 on ICE Futures Europe after having traded as high as €7.85 earlier in the day – the loftiest level seen since Feb. 24.

Trade was brisk at nearly 14.8 million units changing hands on the contract.

Volume down the rest of the futures curve was light in comparison, suggesting that speculators were behind most of today’s activity. Some 75% of all EUA volume recorded on ICE today was done on the Dec-15s, a higher proportion than normal.

“(Buyers) kept pushing it higher but eventually we lost that momentum before hitting that €7.90 level everyone’s eyeing,” one trader said, referring to the 2015 high that many are targeting as the Dec-15 contract’s next technical barrier.

Front-year EUAs closed at their highest level since 2012 on Monday after breaking through a key technical level around €7.65 that had vexed bullish traders since the start of June.

“Maybe there will be something in tomorrow’s reform proposals to take us over the hump,” the trader added, referring to a plan for post-2020 changes to the EU ETS to be published by the European Commission.

This week’s gains in EUA prices have been triggered by news of eurozone leaders clinching a deal for a third bailout package for Greece.

Traders said they are still closely watching developments in Greece, where PM Alexis Tspiras now has roughly 24 hours to convince his wary parliament to accept severe reforms conditional to the bailout that can secure the country’s future in the eurozone.

Meanwhile, German power, the euro and coal prices were all relatively steady on Tuesday.

Earlier in the day, a group of 25 EU nations auctioned 2.9 million spot EUAs, in a sale that cleared a cent below market at €7.72 and was 2.7 times oversubscribed.

By Mike Szabo – mike@carbon-pulse.com