Monday, April 11, 2016

EUA Dec16: Testing the upper edge of the 2-month trading range

The EUA Dec16 contract resumed its upward move last Monday, closing the session at 5.33 euro, some 0.15 euro higher compared to the previous close. The contract closed above the 50DMA for the first time since 4 December 2015, indicating that the contract regains some of its strength.

The benchmark carbon contract opened at 5.30 euro on Tuesday, 3 cents below Monday’s settlement price. It managed to touch Monday’s high at 5.33 during the day, but no new local high could be reached with German power falling steeply. The price slipped briefly to 5.18 euro, but recovered later on and was not able to climb into positive territory by the end of the day. It closed at 5.24 euro, 1.7% below Monday’s settlement price.

On Wednesday, the price opened 2 cents above Tuesday’s settlement price, at 5.26 euro, lifting the 20DMA above the 30DMA and providing a bullish signal. The price consolidated above the 50DMA and broke the resistance at 5.35 euro in the morning.

Thursday morning the EUA Dec16 contract reached 5.37 euro - the highest price since 23 February- before exploring the negative territory for the remainder of the day to close the session at 5.28 euro, some 0.03 euro lower than the previous settlement.

Although we saw a sleepy trade during the whole day, the price rallied to 5.46 euro in the last hour of trading on Friday. It was helped by the price of Brent and by the euro, both hitting daily highs in the afternoon.

Some small installations still have to purchase allowances for 2015 compliance which might support the EUA price next week further. 

The auction supply of allowances will be lower by more than 3 million allowances (no UK auction on Wednesday) which is also working in favour of the price appreciation. 

After the price rallied close to the local high from 22 February at 5.49 euro, the next resistance is above 6.00 euro. At the downside, the 5.00 euro level is the most critical.

Source: Bloomberg L.P.

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