Monday, March 2, 2015

EUA Dec15: The ENVI vote didn't bring any new 2015 high

Rumours about a possible compromise between the two major political groups in the ENVI (EPP and S&D) helped the EUA Dec15 to jump close to the 2015 high of 7.90 euro in the first two days of last week, but the price didn't hit a new 2015 high and profit taking started Tuesday afternoon already. 

On Thursday, when most of the installations received their free allowances for 2015 already the benchmark contract fell below the 20 and 30DMAs and couldn't climb back by the end of the day either. On the same day the MACD crossed the signal line, further strengthening the bearish pressure on the price. News about eight CEE countries opposing (and possibly having enough votes to block) the early implementation of the market stability reserve was another factors pushing the price downwards.

After three days of decline we could see a correction on Friday, but the EUA Dec15 remained below the most important resistance levels.

The base range for this week might be 6.67 and 7.50 euro, as further volumes of free allocation might push the price down to 6.80 euro, a good support in the second half of January and February as well. We connected most of the local authorities regarding the 2015 free allocation and we received the feedback that most of them did everything to transfer the allowances. (The exceptions are countries where the registry is waiting for the authorization of the competent ministry, like Poland.)

Should one of the eight countries opposing the early implementation of the MSR (Poland, Cyprus, Bulgaria, Croatia, Czech Republic, Hungary, Lithuania and Romania) apply for a derogation from the Lisbon Treaty and have this way enough votes to block the draft report of the ENVI, the benchmark contract could slip further down to 6.67 euro, the 2015 low.

 Source: Bloomberg Finance L.P.

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