EUA Dec17: Consolidation after days of high volatility

2017-11-20 06:26

In October and the first half of November, the benchmark carbon contract consolidated between 7 and 8 euro. This range remains our base range for this week as well, although we recognise some downward pressure from the abundant auction supply, the mild weather and the MACD falling below the signal curve. Political events like the ENVI and COREPER meetings on Tuesday and Wednesday could move the price in both directions depending on comments regarding the reform of the EU ETS.

Although the EUA Dec17 was able to increase in the first 10 minutes of trading above previous Friday's settlement price, the price slipped continuously last Monday morning. After hitting a daily minimum at 7.25 euro, the price recovered. The carbon market received support from a relatively strong auction (the clearing price was in line with the secondary market price) and a mainly unchanged energy mix. The benchmark carbon contract closed at 7.35 euro, a loss of 5 cents of 0.7% from the previous settlement. The traded volume of 9.1m allowances was well below last week's average of 15.4m. Despite the recovery late in the afternoon, the EUA Dec17 was not able to climb back above the 30DMA that was a strong support since summer. This was a negative signal together with the MACD slipping below the signal curve the previous Friday.

The EUA Dec17 had a balanced day on Tuesday, but ended a 5-day losing streak. After opening with a 2 cents gap down in the morning, the price moved in waves between 7.24 and 7.45 euro while the volume weighted average price was 7.33 euro. In the last hour of trading buyers lifted the price to close at 7.39 euro, up 4 cents day on day or 0.5%. The traded volume reached 15.8m versus the 9.1m on Monday.

The EUA Dec17 gained for the second day on Wednesday. The price opened with a 5 cents gap down and slipped to a daily minimum at 7.29 euro. The missing auction and the plummeting coal price, however, helped the carbon price in recovering. The price first broke from the 7.25-7.45 range it was trading in the two previous days. The price then broke above the 20DMA at 7.52 euro and then jumped to a daily maximum at 7.80 euro. 

Although it opened with just one cent gap down at 7.68 euro on Thursday, the EUA Dec17 fell sharply to 7.54 euro in the first five minutes of trading which did not bode well for the rest of the day. Still, the price recovered until 7.77 euro in the morning, but was not able to reach Wednesday's maximum at 7.80 euro. Sellers pushed the price down again in the afternoon. The price closed at the daily minimum of 7.50 euro, a loss of 19 cents or 2.5%. The traded volume was the second highest of the week. The fact that the price remained above the 30DMA is a positive sign.

Friday was another quiet day with the lowest intraday volatility of the week. The price opened in line with Thursday's close and hit a daily maximum at 7.59 euro before turning lower in the afternoon. From the daily minimum at 7.42 euro the price was still able to recover and closed the day at 7.48 euro, a marginal loss of 2 cents on a daily basis, but a gain of 1.1% in a weekly comparison.

In October and the first half of November, the benchmark carbon contract consolidated between 7 and 8 euro. This range remains our base range for this week as well, although we recognise some downward pressure from the abundant auction supply, the mild weather and the MACD falling below the signal curve. Political events like the ENVI and COREPER meetings on Tuesday and Wednesday could move the price in both directions depending on comments regarding the reform of the EU ETS.
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Falguera, Marc - ES
Bujacz, Tomasz - PL
Wilamowski, Bartosz - PL
Verger, Guillaume - FR
José M. García Berrendero - ES, PT
Abajas, Africa - Aviation
Gordziel, Christian - DE
Härmatis, Alexandra - SE, NO, DK

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