07/03/2024

During the first week of February, the bearish main trend for EUA prices was confirmed. On a weekly basis, there was a loss of 7.40% compared to Friday, February 2nd. The DEC24 EUA reached new lows since 2022 and moved towards the abyss reached just after Ukraine’s invasion at €55/tonne. Weekly lows were reached on Friday, February 9th, with prices slipping to €58.20/tonne by the afternoon. DEC24 EUAs had embarked on a completely bearish path since Wednesday, February 7th, after bouncing several times on the old support slightly below €62/tonne. Following this, the technical threshold at €55/tonne remained. Although the DEC24 had once again traded below the lower Bollinger band, the market was still not oversold, with an RSI at 32 points on February 12th.

The second week of February saw prices on the market maintain their bearish trend, losing 2.77% since Friday, February 9th. EUA DEC24 prices reached lows of €55.41/tonne during Wednesday’s session, only to timidly bounce back and close the week. The market had entered oversold territory, justifying a small bounce. However, the bearish sessions of the week saw steeper depreciations than the bullish ones. The support at €55/tonne, the lowest level since the post-invasion of Ukraine, remained a key threshold. Below this level, there were very “ancient” supports at €48 and €40/tonne. It became clear that demand couldn’t sustain prices, and further justification was found in the globally lower emission levels of the previous year.

The market remained bearish in the third week of the month as well, with the DEC24 EUA losing 8.66% on a weekly basis compared to Friday, February 16th. The exchange remained strongly in oversold territory, with an RSI at 27 points. As a result, a bounce was likely. The main trend remained bearish, bringing EUAs to their lowest level since 2021, with dips reaching €51.08/tonne on February 23rd. The most bearish day was Monday, February 19th, with the front-year contract losing €3.63/tonne in a single day. Despite a weak bounce on the following two days, the DEC24 EUAs ended the week bearish.

The last week of the month saw the market bounce back. EUAs recovered 7.95% on a weekly basis, erasing the losses registered the previous week. During the period, the DEC24 EUA reached a peak of €58.88/tonne (Wednesday, February 28th) after a bull run that began the previous Monday. In the last two sessions of the week, the front-year permit relaxed but remained above €55.05/tonne. These were the highest prices since eight sessions. Volumetrically, the week was also significant, with over 45 million allowances traded on Wednesday, marking the highest liquidity in over a year (since December 6th, 2022). This makes the volumetric high at €58.88/tonne an important new resistance level, while the psychological support remains at €50.00/tonne.

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Francesco Rogato
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With his commodity trading experience, specializing in the energy sector, and extensive knowledge of European exchange platforms and Over-The-Counter markets, he brings his advanced analytical view on the EU ETS carbon market in a monthly short blog, “Let’s Talk Carbon”.