At the beginning of the month, the market showed low liquidity, with an average of 15 million tons traded daily on the DEC22 contract. However, prices remained bullish, drawing a trading range that has been quite big for the first week of the year: this channel is 8,75 €/tonne wide. On a weekly basis, EUAs gain 5,91% on DEC22 with peaks over 88 €/tonne. It is useful to define the primary trend of the quarter during the first weeks of 2022, which ends with the surrender of the allowances by stationary plants within April 30th.
In the second week of the month, volumes have risen in the carbon markets, with a daily average of 25 million EUAs traded daily on the front-year contract. The price change is negative on a weekly basis: -3,91% from Friday, January 7th. The front year EUA future multiple times strikes lows under the 80 €/tonne threshold, although the daily settlements have always been above this level. This shows us that this is quite a solid area to limit depreciations. Last Monday’s session was pretty remarkable, which saw EUAs fall over 5 € from the morning highs at 87 €/tonne. This session created a bearish trend for the rest of the week. Prices always struggled to move over 83 €/tonne and have been balancing around the 20-day moving average, precisely at the middle of the channel designed by the Bollinger bands.
During January’s third week, some slight price gains return on the allowances, with a weekly rise of +2,91%. The highest prices of the week stand at 85,97 €/tonne, the peak since January 10th. The market remains in an accumulation phase and trend definition. Therefore, the key is monitoring the support and the resistance, respectively at 79,00 €/tonne and 87,00 €/tonne, quite a wide range. Prices never reach levels outside this channel and are indeed moving in quite a wide range (6,97 €/tonne).
The last week of the month appears again bullish, with a rise of 5,62% compared with Friday, January 21st. Quotations reach peaks extremely close to the historical records, with weekly (and yearly) highs at 90,63 €/tonne on the DEC22 contract. The most substantial price gains are realized mid-week, with the front-year EUAs that once again break through the critical threshold of 87,00 €/tonne and reach the level of 90 € sharp on Wednesday.
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”.