Overview

EUAs have shrugged off any upward pressure from colder weather and increasing war risk in the Middle East to fall further this week whilst European energy markets rallied. Although the benchmark December 26 EUA futures contract slumped below €90 on Monday, a retracement saw the market move back up above €88 until Wednesday’s Commitment of Traders report sparked a few sessions of heavy selling. The report showed that funds had cut their positions by 14 million tonnes – the largest since last April – but the market had expected more, and this proved a trigger to sell.

Sentiment that EUAs were overbought saw prices drop rapidly to €86.64 on Wednesday and then to a low of €83.72 yesterday. To close the week there is still softness in the market, but all analysts are now talking about the risks of a rally as buyers take advantage of the dip.