European carbon prices rose on Wednesday, bolstered by a well-bid auction and firmer power prices, and on technical buying after the benchmark EUA contract climbed back above a key marker.
Front-year EU Allowances trading on ICE Futures Europe settled up 6 cents at €8.24 on moderate volume of 9.9 million units, after trading as high as €8.27.
“Power was moving higher, but I think it was a technical reaction to climbing back above the moving average,” one trader said.
He was referring to the Dec-15 futures’ 20-day moving average and middle Bollinger Band, which at €8.18 was aligned with a technical level that has acted as both support and resistance for the contract over the past month.
Prices drifted down as low as €8.14 in early trade, but clawed back to €8.18 after the UK auction.
The country sold 3.123 million spot EUAs for €8.12 each, in a sale that cleared in line with the secondary spot market, whereas the previous four daily government auctions have cleared below market.
Today’s sale attracted bids worth a total 10.65 million units, the most seen in an auction since late July.
EUAs then traded sideways for most of the afternoon, before they broke above €8.21 and traded up to the day’s peak, only to slip back slightly in the final 30 minutes.
Front-year German power prices and the euro gained slightly to provide support some to carbon.
But a 60-cent rise in Cal-16 DES ARA coal offset these factors and dented the German clean dark spreads, pushing them down to their lowest in six sessions.
The trader said speculators were likely reluctant to make any big bets ahead of Thursday’s decision by the US Federal Reserve on interest rates, as any shift in policy would likely have a knock-on effect on currencies and wider energy markets.
Meanwhile, a sizeable 1.65 million CERs changed hands on ICE for delivery between Dec. 2015 and Dec. 2018.
The bulk of trades were done on the front-year Dec-15s, which ended unchanged at 50 cents.
The CER futures curve remains in backwardation, with the daily futures settling at 51 cents, the Dec-16s settling at 49 cents, and the Dec-17s through Dec-20s all settling at 48 cents.
By Mike Szabo – mike@carbon-pulse.com
