EU carbon prices slipped for the third consecutive session on Monday as analysts gave a bearish-to-neutral outlook this week.
The Dec-15 EUA contract settled down 4 cents at €8.35 on ICE, after a fairly modest session of 7.4 million turnover moving in a €8.33-8.44 range.
The contract lost 4 cents on Friday and a cent on Thursday, after hitting a three-year peak of €8.51.
Falls in German power and European gas prices are putting pressure on carbon prices, according to Bernadett Papp, an analyst at brokers Vertis.
She identified Thursday’s ECB interest rate-setting meeting as a potential price driver due to a recent trend of carbon reacting to changes in the euro currency rate.
“Although no change in the current rate of 0.05% is expected … the president of the bank might hint on planned measures to boost the European economy, which might move the FX pair and the carbon at the same time.”
She pegged the first technical support level for carbon at €8.30, with a further support at €8.18 near several moving averages, adding that the recent peak of €8.51 was seen as resistance.
German power prices fell on Monday, with the year-ahead baseload contract shedding 6 cents to settle at €28.92/MWh on ICE.
But German clean dark spreads were little changed as the weaker power prices were offset by falls in coal prices and carbon.
UPWARD TREND
Traders Redshaw Advisors said in a weekly note that last week’s push to a three-year high was likely speculator-driven but continued support from end-user buyers will keep prices on a gradual upward trend.
Analysts at Thomson Reuters were less bullish and had a neutral outlook for the week due to the loss of momentum late last week after carbon peaked.
“Carbon’s bullish trend is still intact, but Friday’s candlestick pattern shows the market has lost some of its momentum and presages a temporary pause,” the said in a weekly note.
AUCTIONS
The EU’s sale of 2.9 million spot EUAs cleared 3 cents below market at €8.35, though it attracted above-average bid coverage of 3.8.
Secondary market prices were little changed following the publication of the clearing price.
Auction supply will ease slightly this week without the UK’s fortnightly sale, dropping to 11.9 million from last week’s 15.1 million.
By Ben Garside – ben@carbon-pulse.com
