Euro Markets: EUAs drop a third day as gas continues sideways trading, while UKAs make late rally
European carbon prices fell for a third day, reaching their lowest in more than seven weeks on Monday, as natural gas prices were little changed despite a worsening outlook for demand amid rising temperatures in northern Europe and a persistently negative clean dark spread.
Read MoreEuro Markets: EUAs ease 0.2% on the week as carbon resumes tight correlation to TTF gas
After a steady opening on Friday, EU carbon prices drifted for much of the day before finding support to end the week little changed, while natural gas prices also followed a slow but steady downward path, reinforcing the view that carbon has resumed its previous close correlation to TTF prices.
Read MoreEuro Markets: EUAs back in close formation with natural gas, while UKAs plummet most in six months
European carbon prices resumed their close formation with natural gas prices on Thursday, with EU ETS levels falling 1.6% as the market tracked the ebb and flow of the TTF’s reaction to news that Russian LNG transshipments through Europe will be banned, potentially adding to regional supply, while UK Allowances prices were “absolutely smashed” amid a surge of aggressive selling.
Read MoreEuro Markets: EUAs jump most in a month as options expiry releases market to track gas prices
European carbon prices posted a strong afternoon gain after the expiry of the June options contract in the early afternoon appeared to release EUAs to resume their close correlation with natural gas, while UKAs retreated after reaching their highest level in eight months, as profit-taking picked up to offset some speculative bullishness around the approaching election.
Read MoreEuro Markets: EUAs remain rangebound ahead of options expiry as UKAs finally breach key level
European carbon prices edged higher but remained broadly within their recent range on Tuesday, moving in a €1.54 channel as the market continued to position itself ahead of Wednesday’s expiry of the June options contract, while UK Allowances broke above a key psychological level that had been capping the British market’s recent rally.
Read MoreEuro Markets: EUAs steady ahead of options expiry in quiet trading as UKAs rise to eight-month high
With the June options contract expiry just two days away, European carbon prices appeared to find a level with sellers’ efforts to drive prices lower running into more robust buying interest, leaving EUAs lagging behind a steeper drop in natural gas and seeming to confirm that the correlation between the two prices has temporarily been broken, while UKAs rose to settle at an eight-month high.
Read MoreEuro Markets: EUAs finally give way under weight of options-related selling, while UKA discount at one-year low
After clinging to the week’s narrow trading range for the first half of Friday, European carbon prices fell away to a six-week low in the afternoon as option traders unwound hedges ahead of next Wednesday’s expiry of the June options contracts, while UK allowances trimmed their discount to the European contract to the least in a year.
Read MoreEuro Markets: EUAs give up early gains as late return to rangebound trading highlights options pull
European carbon allowances remained firmly rangebound for a fourth day, shrugging off a near 10% rally in natural gas this week as the weight of open interest in June EUA call options appeared to be acting as an anchor on prices, breaking the long-standing correlation between the two markets.
Read MoreEuro Markets: EUAs remain rangebound ahead of options expiry as funds cut some length
European carbon prices were little changed for a third day on Wednesday as a robust rally along with natural gas after early weakness was erased by the close, while weekly Commitment of Traders data showed that the aggregate net short position among investment funds continued to grow due to an overall reduction in long positions.
Read MoreEU ETS2 prices forecast to rise four-fold in first four years despite front-loading -analysts
Prices in the EU’s second emissions trading system could jump more than four-fold within the first four years of the market’s operation as an initial excess in allowance supply is rapidly replaced by a deficit as an early market-priming initiative gives way to strong demand, according to analysts.
Read More