EU carbon steady as markets await US Fed decision

Published 17:31 on September 17, 2015  /  Last updated at 17:31 on September 17, 2015  /  EMEA, EU ETS  /  No Comments

European carbon prices were steady along with the rest of the energy complex on Thursday, as traders held back from making any big moves ahead of this evening’s Fed decision on US interest rates.

European carbon prices were steady along with the rest of the energy complex on Thursday, as traders held back from making any big moves ahead of this evening’s Fed decision on US interest rates.

The front-year EUA futures trading on ICE Futures Europe closed unchanged at €8.24, on light volume of fewer than 5 million units.

A further 1.4 million permits changed hands along the rest of the curve, including 603,000 on the Dec-17s.

The US Federal Reserve is due to announce its verdict on where to set interest rates at 1800 GMT, in one of the most widely anticipated monetary policy decisions in years.

It appeared almost certain several months ago that the Fed would raise rates in September for the first time in nine years, but turmoil in financial markets and worries about China’s economy have since cast much uncertainty on the decision, which could have a widespread effect on global energy prices.

German calendar-year baseload power prices were little changed on Thursday, as were DES ARA coal forwards.  The euro weakened slightly against the dollar.

The Dec-15 EUAs climbed to their intraday high of €8.27 in the first 20 minutes of trade before drifting down to their session low of €8.19 just after 0900 GMT, the time Thursday’s auction bidding window closed.

A group of 25 EU nations sold 2.918 million EUAs for €8.18 each, a cent above the secondary spot at the time.

The sale was well-bid with total interest equivalent to 11.4 million EUAs – the most for a government allowance auction since late June.

The four sales held so far this week have attracted total bids worth an average of 9.5 million units – also a level not seen in nearly three months.

German is due to sell 3.198 million units to close out the week, which saw a near two-month high of 15.08 million allowances come to market.

Sale volumes will decrease slightly next week to 14.81 million, before rising back to 15.08 million the following week.

Meanwhile, more than 1.1 million CERs changed hands on ICE on Thursday, with 250,000 done on the daily futures and 859,000 done on the Dec-15s.

The contracts ended unchanged at €0.51 and €0.50 respectively, keeping the futures curve in backwardation.

By Mike Szabo – mike@carbon-pulse.com

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