Overview

Last week’s EUA price activity remained stubbornly uncorrelated with energy markets which themselves remained in the grip of the war in the Middle East. Although crude oil and natural gas prices fell significantly early last week as developments in the Gulf suggested that energy shipments might flow more easily through the Strait of Hormuz, EUA prices managed to build a little from €70 to €72 on the benchmark December 26 futures contract. This positive sentiment remained short-lived, however, and just as Brent crude was gaining more ground above $100/barrel in the second half of the week, EUAs dropped sharply from €72 to €68 during last Thursday’s session. Commentators have tried to highlight more routine price drivers for this week such as options expiries and traders’ positions, but carbon markets seem poised waiting for the outcome of further EU political decisions as EU leaders wait to make their feelings known on the ongoing talks of ETS reform.