Monday, April 20, 2015

EUA Dec15: Moving sideways in a 20 cents range

Last week was rather boring in the EUA market. The negative effect of the weak German dark spread was offset by small compliance buyers which resulted in low volumes (from Wednesday on daily volumes remained well below 10 million in the benchmark contract) and sideways movement. The price moved in a range of 20 cents between 6.76 and 7.00 euro.

The EUA Dec15 opened at 7.00 euro last Monday, 2 cents higher than the closing price the Friday before. The price then slid continuously to hit a daily low at 6.81 euro three times. The contract fell more than 2% on Monday and closed below the 30DMA at 6.91 euro. 

The price continued its downward path Tuesday morning and fell to just one cent above the 6.75 euro daily low from 31 March, but closed unchanged at 6.84 euro. At the same time the MACD slipped below the zero line. The support level at 6.75 euro, however, stopped the further depreciation for the week.

The EUA Dec15 didn’t hit any new local lows on Wednesday, but the 20 and 30DMAs stopped it from further appreciation as well. The 30DMA was finally broken on Thursday when the price hit an intraday high of 6.97 euro. 

The price is moving between the 200 and 20DMAs, maybe closer to the upper edge of the range. It is positive, that daily lows were higher day by day and daily highs were slightly increasing, although Friday spoiled the momentum. 

It might be slightly supportive for the price that this week's auction volume is some 3 million less than last week. On the other hand, there are still plenty of allowances to be distributed by member states to both industrials and power companies (2015 free allocation and 2014 derogation).

Several technical meetings will take place this week in Brussels, where the MSR might be discussed as well. This might increase the news flow about the reform of the EU ETS and the volatility of the EUA price. Depending on the comments and proposals, the first strong support to break is the 200DMA at 6.76 euro, while to the upside it's the 20DMA at 7.00 euro.

 Source: Bloomberg Finance L.P.

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