EU carbon prices rose on Thursday to match then later extend the previous session’s 33-month high of €8.38 as speculators bet on further gains while auction supply is curtailed.
The benchmark Dec-15 EUAs shot to as high as €8.43 in early afternoon, but eased back to settle at €8.37, a 2 cent daily gain, on turnover just under 12 million on ICE.
The EU’s auction of 1.459 million spot EUAs cleared one cent above market at €8.31, with three out of four of this week’s sales now bucking the regular pattern of clearing slightly below secondary market levels.
The sale was 3.82 times oversubscribed, with all sales this week well above the year’s average bid-to-cover ratio just above 3.
After a slow start, carbon has advanced 6.3% so far in August, a month when government auction supply is half the usual due to a scaled-back holiday sales calendar.
Traders are sceptical that these price levels can be sustained when normal auction volumes resume in September, as they argue that thinner overall trading volume is making it easier for speculators to move the market.
August turnover has been down at around 60% of normal volume on all major platforms.
Below are the auctions this week, distance to market, bid-to-cover ratios:
8/17/2015 EU 1,459,000 +€0.01 v market, btc 4.12
8/18/2015 EU 1,459,000 -€0.02 v market, btc 4.20
8/19/2015 UK 1,564,500 +€0.03 v market, btc 3.25
8/20/2015 EU 1,459,000 +€0.01 v market, btc 3.82
8/21/2015 DE 1,599,000
By Ben Garside – firstname.lastname@example.org