Auction volume: 11.5 million EUAs, 0.7 million more than last week.

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Energy Fundamentals

The fundamental backdrop remains finely balanced, with geopolitical risk providing support to the broader energy complex while carbon-specific policy developments continue to shape sentiment in the EUA market. European gas storage has improved to 51.8%, reducing immediate supply concerns, although inventories remain below historical averages for this stage of the injection season. This keeps the market attentive to any disruption that could tighten the supply outlook ahead of winter. Geopolitical tensions intensified once again as Iran expanded attacks across the Gulf following additional US strikes, pushing oil prices more than 3% higher. Combined with Western Europe recording its hottest June on record, the renewed pressure on energy markets could support power generation costs and, in turn, provide a constructive backdrop for carbon demand if higher fossil fuel generation persists. On the policy front, attention remains firmly on Brussels. EU lawmakers voted to expand CBAM to more than 400 downstream products, reinforcing the EU's long-term commitment to carbon pricing. At the same time, proposals from the EU's largest political group to ease the carbon burden on industry, alongside regional calls for greater ETS funding flexibility, highlight that affordability and competitiveness remain central themes; the expectation is to hear more about this on Friday the 17th of July. While these discussions may create short-term uncertainty, they have not yet altered the market's expectation that the EU ETS will remain the cornerstone of European climate policy.

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For the week ahead, EUA prices are likely to remain driven by the balance between geopolitical support from stronger energy markets and evolving expectations surrounding ETS reform. Trading activity has already begun to thin, leaving the market largely rangebound ahead of further policy developments. Unless concrete proposals emerge that materially change allowance supply, the broader backdrop remains supportive of prices holding current levels, with geopolitical headlines likely to remain the primary catalyst for any near-term breakout.

• Gas storage currently sits at 51.8% (July 11th, 2026)
• EU lawmakers vote to extend CBAM to more than 400 downstream products
• EU's biggest political group seeks to ease carbon market burden on industry, draft shows
• Airline retires second tranche of CORSIA credits, taking total to 250k
• Iran escalates attacks across the Gulf after more US strikes
• Oil prices jump more than 3%
• Western Europe records hottest June on record, EU scientists say
• EUAs remain rangebound as trade volume falls away ahead of policy developments
• Region seeks more ETS cash and flexibility on carbon costs

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Investment Funds

• Investment funds increased their net short position to +58.53m EUAs on June 3rd of July (vs. +62.22 EUAs on June 26th).
• Gross short positions increased to -17.85m  EUAs (vs.-16.81m EUAs).
• Gross long positions decreased to 76.38 mln EUAs (vs. 79.04m  EUAs).
  

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Market Prices

• Indicative Dec26 EUA Price: € 80.15
• Indicative Spot EUA Price: €79.21
• YTD Spot EUA Price: €75.93
• MTD Spot EUA Price: €78.88
  

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Chart A: EUA Spot (Futures Today) Price (EUR)

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Technical Analysis

December 2026 EUAs continue to consolidate after the strong recovery from the March lows, with price action remaining above both the 50-day and 100-day moving averages. While momentum has cooled over the past week, the broader structure remains constructive, as the series of higher lows established since late March is still intact. The recent pullback appears corrective rather than a shift in trend, with buyers continuing to defend the €79–80 region. The Bollinger Bands have narrowed, reflecting a decline in volatility following the advance. Price is currently trading around the middle of the bands, suggesting a balanced market awaiting fresh directional catalysts later this week. The 20-day moving average continues to provide dynamic support, while the 50-day MA has turned higher and remains below current price. The 100-day MA is still positioned underneath the market, reinforcing that the medium-term trend has shifted from bearish to increasingly constructive. Momentum indicators also point to a market that is consolidating rather than reversing. RSI has eased back toward the neutral 50 level after previously approaching overbought territory, indicating that bullish momentum has moderated without becoming weak. MACD remains above zero, although the histogram has flattened, reflecting a temporary loss of upside momentum rather than a bearish reversal. CCI has recovered from oversold territory but remains relatively subdued, supporting the view that price is digesting recent gains.

The technical picture remains tentatively bullish while price holds above the €79–80 support zone and the rising 20-day moving average. A break back above €81–82 would likely re-establish bullish momentum and open the way for a retest of recent highs. Conversely, a sustained move below the 50-day moving average would weaken the current recovery structure and could trigger a deeper corrective phase, though the broader medium-term outlook remains constructive for now.

Chart B: December 2026 EUA Price (EUR) - Technical

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AFS ENERGY B.V.

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