Monday, February 13, 2017

EUA Dec17: Uncertainty about plenary vote pushed down the carbon price

Despite slipping to 5.06 euro in the first hours of trading on Monday, the EUA Dec17 recovered after the strong auction and consolidated around 5.13 euro. The benchmark carbon contract closed at the lower edge of the daily range.
EUA prices edged slightly higher on Tuesday, but the traded volume remained below the monthly average. The EUA Dec17 started the day range-bound but moved upward after the auction results were published. The contract closed the session at 5.17 euro, up 0.07 euro from the previous close.
The benchmark contract touched slightly higher on Wednesday, supported by the wider energy markets. The bellwether contract traded on both sides of the previous close with an attempt to break above 5.28 euro, the intraday high, in late trading before coming back down to close the day at 5.22 euro, up 0.05 euro day on day.
The price rose on Thursday for the third consecutive day, lifted by German power and coal prices and came as high, and hit the intraday high at 5.44 euro, but prices fell from there to close the day 0.06 higher than the previous close.
The price had an ambitious start on Friday opening 3 cents above Thursday’s settlement price. Despite trying to climb higher, the previous day’s maximum at 5.44 euro could not be reached, because the price turned lower as the market started questioning the outcome of the vote of the plenary of the European Parliament about the reform of the EU ETS. The price fell below the 20DMA and closed at 5.12 euro. It dragged also the 30DMA to the 200DMA which is a bearish signal.

The price closed the week below the most important moving averages. In addition, the last two candles of the chart form a bearish engulfing which does not bode well for price increases this week. Depending on the outcome of the plenary vote about the ETS reform on Wednesday, the price could either fall below the 5 euro level and retest the January low at 4.60 euro or in a positive scenario, it could turn higher and after breaking the resistance of the moving averages, it could retest the 5.60 euro level.


Source: Bloomberg, ICE

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