At the beginning of October, the market had been looking for a direction after the depreciation seen at the end of September. DEC23 EUAs, which had been losing 1.48% on a weekly basis, were trading very close to the yearly lows. During the sessions of the 3rd and the 4th prices had been below 80.00 €/tonne, and a support had formed at 79.50 €/tonne. The DEC23 EUAs had been moving inside the channel contained by the lower Bollinger band (around 79.00 €/tonne) and the 20-day moving average (82.14 €/tonne), which had been acting as the primary resistance. The outlook had been uncertain for the short term, and this had also been evident in the stochastic oscillator, which had alternated between bullish and bearish signals depending on the day. For the medium term, the MACD had remained bearish. EUAs had not felt any effect from the new developments in the Middle East, which many had believed to be bullish due to the potential oil production cuts.
During the second week, the market had returned positive for EUA prices, which had gained 6.82% on a weekly basis. The crisis in the Middle East and the shadow of potential oil cuts had impacted the price of all energetic commodities in Europe, especially the TTF. As a direct consequence, CO2 had once again moved above 86.00 €/tonne last Friday on the DEC23 future. Tuesday, the 10th, had been explosive for prices, with the front-year experiencing the biggest appreciation of the period with over +3 € on a single session, a price gain of almost 4% (reaching the highest since the end of September at 85.06 €/tonne). Following this renewed bullish sentiment, EUAs continued to rise until Friday, the 13th, breaking several resistances, including the ‘key’ one at 85.50 €/tonne.
During the third week, prices had turned bearish, losing most of the ground gained in the previous 7 days, with a 5.28% depreciation from Friday, October 13th. The front-year contract had started decreasing already on Monday, the 16th, and had failed to recover throughout the week. The market had been moving towards the main support, which had still been far away and around 79.50 €/tonne, corresponding to the volumetric low of October 4th. This had been a key level that had stopped the bearish pressures that started at the end of September, and being just slightly above the yearly low, it had represented a critical area for EUA prices.
During the last week of October, the DEC23 contract had been trading very close to the yearly lows and had lost 2.53% during this period. Towards the end of the sessions on the 27th, lows had been seen at 79.30 €/tonne, which had not been touched since May 31st. The trading range had also been narrowing, with the front-year trading in a channel that had been only 2.20 €/tonne wide, a clear signal that there had been indecision in the market, and it had been hard to identify a clear direction for quotations.
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”.