Overview

EUA (Dec-26) extended its rally last week, climbing from the prior Friday's close of €86.26 to settle at €89.19 on Friday, with an intraday push to €90.15 on Friday, the highest level since January. The move was driven almost entirely by energy: Dutch TTF front-month gas hit €97.64/MWh on Tuesday (highest since 2022) and broke above €100/MWh for the first time since 2022 by Wednesday, as the Iran conflict curtailed LNG flows through the Strait of Hormuz and German storage refill lagged last year's pace (~61% full vs ~75% a year ago).

Carbon tracked gas higher through most of the week on fuel-switching and compliance-buying logic, but the correlation partly broke down by Thursday/Friday, when EUAs went essentially flat even as day-ahead power actually eased as strong wind output offset gas-driven cost pressure, before firming again into the weekend. That decoupling suggests the carbon leg of the rally was being driven more by the gas/fuel-switching narrative and short-covering than by realised power-market tightness.