EUA Dec20: 1% loss in February as market prepares for more auction supply

2020-03-02 00:00

The benchmark carbon contract lost 1.1% in February as the market participants prepare for a higher supply from March due to the restarting British auctions. Investors are also keeping an eye on the fast spreading coronavirus and its effects on the economy.

The EUA Dec20 spent the first days of February in the 23-24 euro range before testing the 200DMA mid-month. The faster than expected spread of the coronavirus in Europe however took its toll on the carbon price as well and pushed the price back below 24 euro and the 20 and 30DMAs by the end of the month. February is generally a negative month for the carbon market and this year was no exemption.

The price was range bound between 23 and 27 euro since mid-October with some false break-outs. As the fundamental risks (high supply, decarbonisation of the power sector, coronavirus) remain, the price could break down from the lower edge of the range and test the October low at 22.26 euro. With the RSI around 40, there is still room for that.

In a positive scenario, the first resistances will be the 20 and 30DMAs followed by the 200DMA.
 
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