At the beginning of the month, there was a volume contraction due to bank holidays in Europe on the 2nd and 6th of June. EUA DEC22 dropped an overall 3,29 % from Friday, May 27th. In particular, the front-year contract dropped over 5 €/tonne on June 6th, while it had only moved upward since the middle of May. Prices retraced, trading below the 20-day moving average with a support at 81,30 €/tonne, which limited bearish moves also on May 26th the previous week. On June 3rd, the market presented the lowest liquidity since December 31st, with only 4,55 million allowances traded.
During the second week of the month, DEC22 EUAs closed the period almost unchanged from Friday, June 10th: the price of the permit on June 15th closed slightly above 82 €/tonne after peaking at 86,90 €/tonne the previous day. The market was then looking for direction and, during the month of June, it was strongly influenced by European policy decisions. A support level which held for the whole week is the 20-day moving average, around 83,30 €/tonne, while the resistance at 87 €/tonne remained relatively strong. This level limited bullish breakouts during the month, specifically on the 6th, 15th, and 16th.
During June’s third week, the market showed some directional movement, however prices moved in a narrow range with Bollinger bands shrinking and a weekly channel ‘only’ 3,88 € wide. Weekly variation from Friday 17th was positive, with the DEC22 EUAs, which earned 1,29%. The 20-day moving average was 83,38 €/tonne at the beginning of the week and stayed operating as support, while since Wednesday of the same week, the 50-day moving average (at this point at 84,50 €/tonne) had been limiting price gains.
In June’s last week, EUAs were uneven, with an overall price gain of 2,58% and a trading range 7,35 €/tonne wide. Since Monday the 27th, a bullish trend appeared with acceleration and ended June’s session with 91,16 €/t in settlement. Historically the summer months are favorable to high volatility. The market will show volatility in the coming months until the developments of the current political scenarios and the new policy advancements after the summer pause of the legislator.
Francesco Rogato
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”.