11/07/2024

The first week of June ended on a negative note for prices. EUA DEC24 decreased by 3.66% compared to the prices on May 31st, reaching a low of 71.01 €/tonne towards the end of the period. The bearish sentiment extended into the following week: the DEC24 EUAs closed at a striking -4.36% on Friday, June 7th, with the lowest prices at 68.17 €/tonne. At that moment, this was the lowest point since May 3rd. During the second week of the month, EUA prices moved in a ‘narrow range’ for the first half of the week, alternating between two bearish and two bullish sessions. This contraction in volatility, as forecasted, resulted in strong lateral movement during the session on Friday, June 14th. The bearish movement saw a daily loss of 2.43 €/tonne, primarily realized towards the end of the session after a morning that struggled to depreciate. This breakout marked the highest liquidity day since May 2nd, with almost 40 million allowances traded.

The following week, from June 17th to June 21st, EUA prices continued to decrease, with the DEC24 contract dropping by 0.22% compared to Friday, June 14th, reaching daily lows of 67.94 €/tonne towards the end of the week, a new low since the beginning of May. The front-year contract appeared bullish for the first three sessions of the week, gaining almost 2 € in a single session on Tuesday, June 18th. However, towards the close of the examined period, the DEC24 EUAs lost the gained ground and could not consolidate the price rise.

The last week of June, ending on Friday, June 28th, was yet again bearish with a -0.97% change for the EUA DEC24. Prices seemed to have entered a stagnant phase compared to the volatility explosion seen in May. This week, the trading range was 3.90 €/tonne wide, entirely formed between Friday, June 28th, and Monday, July 1st, when highs and lows were reached at 69.68 and 65.78 €/tonne, respectively. On June 28th, EUAs found support on the 100-day moving average, aligned with the lower Bollinger band and the level where the front-year bounced (around 65.62 €/tonne). This represented the first support, quite strong since it also corresponded to April’s bounce. The first resistance remained the psychological threshold of 70 €/tonne, followed by the area at 71.60-70 €/tonne, which limited price gains for the entire month of June.

It was highly likely that with August approaching (and thus the new compliance deadline and the suspension of auctions), the market would once again experience the usual summer volatility.

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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”.