EU carbon prices climbed to €8.26 early on Thursday, extending the previous session’s 2.5-year high by three cents.

The market turned south after the EU’s auction cleared below market, with the Dec-15 EUA eventually settling flat at €8.20 on relatively healthy turnover of 10.5 million units.

The EU sold 1.459 million spot EUAs at €8.18, returning to a more usual trend of clearing slightly below the secondary market, in contrast to the two previous sales this week.

The benchmark front-year futures have risen 5.3% or 41 cents to their highest since Nov. 2012 this week, for which auction supply is at its lowest this year as part of a scheduled scaling back by government to account for reduced summer demand.

EUA turnover across all platforms has averaged just over 9 million so far in August, well below the year-to-date average of 16.6 million.

The energy complex provided a slightly bearish signal for carbon, as German baseload clean dark spreads narrowed by a few cents as the dollar rebounded against the euro on strong US economy data, making imported coal prices more expensive for EU utilities.

Financial results from RWE, which accounted for just under 10% of all ETS emissions last year, today suggested the utility had ramped up its carbon buying over the first half, over which time EUAs rose just 12 cents.

Below are the auctions this week, distance to market, bid-to-cover ratios:

8/10/2015            EU          1,459,000             +€0.01 v market, btc 3.84

8/11/2015            EU          1,459,000             +€0.02 v market, btc 3.52

8/13/2015            EU          1,459,000             -€0.01 v market, btc 3.20

8/14/2015            DE           1,599,000

By Ben Garside – ben@carbon-pulse.com