Overview

EUA prices last week were more rangebound and cautious before the bullishness of this Monday/Tuesday took over. As last Friday saw the benchmark December 25 futures contract edge lower from €79 to test the support level at €78, the week had been a story of prices edging back from mid €78s and back up to mid €79s. Fairly unimpressive compared to the pyrotechnics up to the €82s seen earlier this week. That said, October has seen the fourth successive monthly increase for EUAs as the second half of the year performs well for carbon. The fundamentals have all been building for EUAs: upcoming reduction in auction volumes, complacency in the gas market leaving upside risk exposure and gradually building long positions from funds and speculators to name a few. Last week these factors were compared to weakening energy markets and growing sentiment that carbon is forging its own, more bullish path.