EU Market: EUAs lift 2% after breaching resistance level

Published 11:29 on September 8, 2015  /  Last updated at 15:14 on May 11, 2016  / Ben Garside /  EMEA, EU ETS  /  No Comments

EU carbon prices climbed 2% on Tuesday after breaking above a level seen as technical resistance following a strong auction result.

EU carbon prices climbed 2% on Tuesday after breaking above a level seen as technical resistance following a strong auction result.

The benchmark Dec-15 EUA futures settled 16 cents higher at €8.25 on ICE, a cent off the day’s peak and nine-day high of €8.26, on turnover of just under 10 million units.

The futures to rose as high as €8.18 on ICE shortly after the EU’s auction cleared at 0900 GMT and gained further in the last hour of trade once that mark had been breached.

The €8.18 mark, the current 20-day moving average and middle Bollinger Band, had been identified by Vertis analyst Bernadette Papp on Monday as a level that carbon needed to breach in order to break out of a short-term bearish trend.

“Carbon is a bullish instrument but people had been cautious with last week’s financial turmoil over China,” said one trader.

“Once we were above €8.18, technically things are looking good again so buyers didn’t need much encouragement.”

Prices shed 0.2% last week as financial markets were gripped with more uncertainty over the state of China’s economy, keeping potential buyers at bay despite a bullish longer-term outlook.

The EU auction of 2.9 million spot EUAs cleared one cent above the secondary spot market for the second straight session, but it attracted fewer bids, notching a bid-to-cover ratio of 2.47.

Few details emerged of Monday’s first closed-door talks between EU member state officials on the post-2020 ETS reform proposal.

The Luxembourg presidency chairing the talks has scheduled a second meeting for late September to prepare for an initial debate among environment ministers at the Environment Council meeting on Oct. 26, an official close to the process told Carbon Pulse.

Meanwhile on Tuesday, German clean dark spreads slipped slightly to fall back from Monday’s two-week highs for 2017 and 2018, as gains in carbon and coal outweighed an uptick in power prices.

This week’s scheduled EUA auctions, clearing price, distance to secondary spot market, and bid-to-cover ratio:

07/09/2015          EU          2,918,000             €8.02   +€0.01             2.85
08/09/2015          EU          2.918,000             €8.09   +€0.01             2.47
09/09/2015          EU          935,000 EUAAs
10/09/2015          EU          2,918,000
11/09/2015          DE          3,198,000

Monday’s table has been corrected after we initially reported the EUAA auction to be scheduled for 10/09/2015

By Ben Garside –