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EU carbon prices jump over Eur90/mT

23/06/2023

François-Xavier Branthôme
European Union
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Carbon prices under the EU Emissions Trading System have been trading near two-month highs as investors continued to take large net short positions, with higher gas prices supporting the wider complex.

EU Allowances for December 2023 rebounded above Eur90/mT, and were trading at Eur94.85/mtCO2e (USD103.9/mT CO2e) as of June 20, up 7.9 % since June 9, ICE data showed.
 

A huge jump in European gas prices has contributed to the strength in carbon. Prices on the Dutch TTF gas contract, the European benchmark, rose by almost 25% this week, driven by a range of bullish factors such as summer maintenance at plants in Norway and competition for liquefied natural gas from Asia. This rally added significant volume to daily demand, supporting higher prices.
"Into July, upside pressure may be maintained through combination of financial investor demand, and cooling demand for power from Northwest Europe," said Michael Evans, lead carbon analyst at S&P Global.

Analysts at carbon trading company Belektron said aggressive moves in gas prices were adding to the bullish momentum. "It seems that markets remain very sensitive and even a period of relatively low prices might not be very long lasting, due to risk of gas supply, warm weather and unreliability of renewables," they said in a recent note.
 

Sources: spglobal.com, ember-climate.org, carboncredits.com