Euro Markets: Midday Update
European carbon prices gathered strength on Monday on low volume, rising 2.5% over the morning as they tracked strength in TTF natural gas, with the few active buyers encountering little resistance amid the quiet market.
Read MoreEuro Markets: EUAs end marginally higher despite healthy TTF gain, as activity starts to wind down
Volatility and trading volume in European carbon allowances diminished on Friday, while prices were marginally higher at the close despite a healthy gain in TTF gas, leaving EUAs with a 5.9% weekly gain as market participants started to clear their desks ahead of the holiday break.
Read MoreEuro Markets: EUAs rise most in 10 weeks as gas prices surge, spec buying returns
European carbon jumped by the most in 10 weeks after breaking through key technical resistances, as speculative buyers returned and natural gas prices appeared to reassert their influence over the EU ETS amid speculation over whether and how the bloc will source additional supplies next year.
Read MoreEuro Markets: EUAs edge higher in narrow range as link to natural gas market stretches
European carbon allowances advanced modestly on Wednesday, loosening their correlation with natural gas prices for a second day as the market accustomed itself to the new front-December contract, while weekly positioning data from the futures exchanges showed speculative traders trimming their bullish bets.
Read MoreETF holdings slump in 2024 as investors flee EUAs for better-performing assets
Exchange-traded fund holdings of EUA futures have fallen to their lowest in more than three years as an 18-month long slump in prices has driven investors away in search of better returns in other markets, despite forecasts pointing towards a strong rally in carbon starting in 2026.
Read MoreEuro Markets: EUAs slump late on resumption of sustained selling pressure
The December 2025 EUA future started its run as the benchmark carbon contract trading in a relatively narrow range on Tuesday morning, before prices slumped late in the day to post a 1.5% fall, triggered by a brief period of substantial selling that sources said reflected both positioning changes and technicals.
Read MoreUK seeks views on changes to ETS free allocation rules ahead of CBAM, confirms current period extension
The UK ETS Authority on Monday opened new public consultations on proposed changes to its method of calculating adjustments to free allocations related to carbon leakage, as well as on future adjustments to free allocations to account for the introduction of the country’s carbon border adjustment mechanism (CBAM).
Read MoreEuro Markets: Expiring Dec-24 contract posts 21% drop in 2024, as trading completes shift to new benchmark
Dec-2024 European carbon futures ended its run as the benchmark EUA contract 21% down from its level at the start of the year, with a 1.7% daily decline as weakening natural gas prices continued to weigh on carbon, while the front-December UKA ended its run down by 27% from Dec. 31, 2023.
Read MoreEuro Markets: EUAs hit five-week low ahead of benchmark contract expiry as prompt gas tumbles
EU carbon allowances fell to a five-week low on Friday, tracking a big drop in natural gas prices as reports emerged of negotiations to keep some Russian exports flowing to Europe next year, while carbon traders began to shift their attention to the Dec-25 EUA futures contract, which takes over as the benchmark early next week.
Read MoreEuro Markets: EUAs track gas plunge to fall most in 8 months as trading picks up across curve
EU carbon prices fell the most in eight months on Thursday amid selling on the back of weakening gas prices, after the bullish run-up ahead of Wednesday’s options expiry gave way to some profit-taking as volumes along the whole curve picked up before the Dec-24 futures contract expires next Monday.
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