Carbon testing long-term uptrend support at EUR68 after breaking below EUR80

By Frank O. Brannvoll, Brannvoll ApS, Denmark

As reported in ICR’s December 2023 issue the break of EUR80 could mean a larger shift in sentiment and this was clearly proven right. Pressured by lower oil, gas and coal prices, as well as continued subdued industrial demand the December 2023 contract has fallen to the major support around EUR68. In addition, financial players have been seen switching out of long positions and going short on a larger scale than before.

However, it also needs to be remembered that the most-traded contract is about to shift into December 2024 and players are switching positions – the December 2024 is currently trading EUR3 higher at EUR71.50.

EUA front-year contract, December 2021-November 2023

The carbon price is EUR68.50, a major support area, but next month will track December 2024, which is currently at EUR71.50. Expect the trading range to be within EUR65-78 at the switch of contract.
The United Kingdom Allowance (UKA) has fallen to EUR39/GBP35 with a 43 per cent discount to the EUA. Brannvoll ApS has lowered the forecasts for 2024 to new range of EUR70-95 with an average of EUR88 for 2024, reflecting the current levels for December 2024.