The first week of September (split with the last week of August) was weak for EUA prices: the DEC23 future had dropped by 0.14% when compared to Friday, August 25th. International fears of an economic slowdown, especially in Germany, had contributed to pushing prices downward. EUA quotations were moving inside a channel that was 2.78 €/tonne wide, and the chart remained primarily flat without any significant breakout. Every day, prices moved below the 365-day moving average, a scenario that was interesting for short operators.
However, the potential demand and the increase in open interest on the market had failed to push prices upward, and EUAs had reached lows at 84.52 €/tonne at the beginning of the week, just above the support area where prices had bounced at the beginning of August. If this support were to be broken, EUAs would have had room to decrease by an additional 4 €. A first area of resistance to bullish breakouts was found where the 100 and 50-day moving averages converged, at around 87 €/tonne, which had been limiting price rises since August 24th.
Losses were extended during the second week of the month. EUA prices were still suffering from international worries related to an economic slowdown, as well as from active short sellers in the market. The DEC23 EUAs had dropped by -4.40 €/tonne, and during Friday’s 8th session, they had reached the lowest points since the beginning of June (81.28 €/tonne). All sessions of the week were bearish, with the one closing seeing the highest daily depreciation. There was no bounce at the level of 82.50 €/ton, as seen in August, and now the front-year contract lacked any important support, except for the psychological one at 80 €/tonne and the yearly low at 77.00 €/tonne.
During the week that started on Monday, September 11th, EUA prices slightly regained some value, closing the week with a +0.97% increase, reaching highs at 84.09 €/tonne on Friday. This trend was then extended the following week. After a first half of the month that had been quite bearish for prices, EUA prices rose again, showing a +3.85% increase from Friday, September 15th, to Friday, September 22nd. EUAs started gaining acceleration and reached new highs since the beginning of the month at 86.13 €/tonne on the 22nd of the month.
DEC23 EUAs broke through several resistances and, after surpassing the 20-day moving average on Thursday, September 21st, were facing a strong resistance area where several moving averages converged (50, 100, and 200 days, at 85.80-86.30 €/tonne). The next thresholds were found at the volumetric high from August 24th (which started the downtrend) and the one at 90.44 €/tonne from August 22nd (which had previously stopped the price rise).
However, the last week of the month did not see an extension of the bullish trend. EUAs dropped by 4.46% compared to Friday, September 22nd, and once again moved below 82.00 €/tonne, reaching lows towards the end of the week at 81.40 €/tonne, while international worries about macroeconomic scenarios started to increase again.
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”.