Volatile CO2 Price and Increased Demand

Today, 04.02.2019, carbon successfully defended the support at €21.36 before embarking on a rally that gained momentum as the day drew on, and eventually climbed back above €22.00. EUAs closed up 4.8% at €23.05. Carbon’s advance was in contrast to power and gas which both retreated by 0.5%, and coal which shed 1.4%.

Supply of 10.6 million EUAs at auction this week is sandwiched between two weeks where more than 15 million allowances are being sold, and this pattern will repeat itself throughout the year. Today’s sale saw 105 separate bids, well above the average of any month since last summer. In addition, January saw an average of 30 bidders participate in each EEX auction, the highest on record.

It’s clear from this data that demand is healthy, if not increasing, and it will be worth watching auction results in the coming month to see if the market has been encouraged to buy while prices remain below recent highs.

Today’s chart

Technically, Friday 01.02.2019 and today’s price action (04.02.2019) completes the “double top” pattern that takes in the respective peaks of January 1 and January 23. The decline since January 23 has reached parity with the drop that ended on January 10, and today’s gain may possibly be the start of a renewed rally. However, we would be cautious before setting a price target, and today’s move needs to be consolidated first.

Source: Carbon Reporter, London