Volatile EUA market lead by gas price moves, turning bearish on increased fear of EP election outcome

By Frank O. Brannvoll, Brannvoll ApS, Denmark

The carbon market saw a marked increase at the end of May as the gas market rose sharply in fear of Norwegian production cuts. The carbon price reached EUR78, but has since dropped as Norwegian producers have assured the market of supply.

The EUA price fell sharply and in combination with the European Parliamentary elections on 9 June, as several players were afraid of being long in case the election sees a victory for the parties wanting to slow the speed and costs of the green transition. New demonstrations in Brussels and other countries are adding to this fear.

Some speculators decided to shorten the market, which now has fallen to the bottom of the uptrend channel. A positive election outcome would send the price above EUR75 and a negative one would easily test the support at EUR68. Range seen at EUR68-78.

EUA front-year contract, November 2022-6 June 2024

Long-term prices for 2030 were unchanged at EUR89. The current Dec24 price is at EUR71.70, down four per cent.

The UK Allowance (UKA) December 2024 price is up 24 per cent to GBP45 (EUR53) and decreased its discount to 35 per cent to the EUA.

Brannvoll ApS maintains the forecast for 2024 to range between EUR55-95 with an average of EUR80 for the Dec24 contract.