Auction volume: 11.1 million EUAs, 2.8 million more than last week.

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Energy Fundamentals

This week's market is being shaped by two opposing forces. On one hand, escalating geopolitical tensions continue to support the broader energy complex. Attacks in the Azov Sea, renewed Ukrainian drone strikes, and rising uncertainty around the Strait of Hormuz have reduced tanker traffic and increased floating LNG storage, pushing oil prices higher. Although European gas storage has improved to 53.7%, supply risks remain firmly on traders' radar, helping to maintain an underlying risk premium across energy markets. At the same time, the focus has increasingly shifted back to European climate policy. The European Commission unveiled a broad package of proposals aimed at strengthening industrial competitiveness while preserving the long-term integrity of the EU ETS. Discussions around moderating the pace of emission reductions for industry have initially been perceived as easing compliance costs. However, these proposals are accompanied by measures that reinforce future carbon demand, including support for industrial electrification, an expansion of the ETS to smaller maritime vessels, and continued integration of the shipping sector. Support from both the shipping and cement industries suggests the market is viewing the reforms as an evolution of the ETS rather than a weakening of the system.

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For EUA prices, the coming week is likely to be driven less by immediate compliance demand and more by how investors interpret the Commission's reform package. While any perception of regulatory relief could temporarily weigh on sentiment, the broader direction remains one of expanding carbon pricing across additional sectors. Combined with ongoing geopolitical uncertainty supporting the wider energy complex, the medium-term backdrop remains constructive, even if prices continue to consolidate in the near term as the market digests the latest policy proposals.

• Gas storage currently sits at 53.7% (July 18th, 2026)
• Fuel crisis, attacks in Azov Sea tighten squeeze on Russian farmers
• More Ukrainian drones strike Moscow region
• Few tankers enter Hormuz to load oil, LNG floating storage rises, data shows
• Oil prices extend gains on escalating Middle East hostilities
• EU proposes slowing down cuts to carbon emissions for businesses
• World Shipping Council Backs EU ETS Revisions for Maritime Decarbonization
• Cement Europe welcomes EU ETS review and electrification action plan
• Commission boosts Europe's competitiveness, decarbonisation and independence with Electrification Action Plan and ETS review
• ICAO statement on proposed expanded scope of EU Emission Trading System
• Brussels proposes extending ETS to smaller ships, reserves billions for green shipping
• World Shipping Council Backs EU ETS Revisions for Maritime Decarbonization
  

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Investment Funds

• Investment funds reduced their net short position to -50.33m EUAs on June 3rd of July (vs. -58.53 EUAs on July 3rd).
• Gross short positions increased to -19.25mln  EUAs (vs.-17.85mln EUAs).
• Gross long positions decreased to 69.58 mln EUAs (vs. 76.38mln  EUAs).
  

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Market Prices

• Indicative Dec26 EUA Price: € 80.65
• Indicative Spot EUA Price: €79.72
• YTD Spot EUA Price: €76.06
• MTD Spot EUA Price: €79.04

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

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Technical Analysis

December 2026 EUAs continue to trade within a well-defined consolidation range following the strong recovery from the March lows. Price remains above both the 50-day moving average (€78.04) and the 100-day moving average (€74.85), preserving the constructive medium-term structure. While the market has struggled to establish a decisive break above recent highs, buyers continue to defend pullbacks, resulting in a sequence of higher lows that keeps the broader bias cautiously positive. The Bollinger Bands have narrowed further, reflecting declining volatility and a market waiting for a fresh catalyst. Price is trading around the 20-day moving average (€79.67) and the EMA (€79.47), indicating equilibrium between buyers and sellers. The upper Bollinger Band at €81.43 continues to act as the first key resistance, while the lower band around €77.91 provides immediate support. A break outside this range is likely to determine the next directional move. Momentum indicators remain broadly neutral. RSI is holding around 56, suggesting there is still room for further upside without entering overbought territory. CCI has recovered back into positive territory after briefly weakening, pointing to improving short-term momentum, while MACD remains above zero, although the histogram has flattened, indicating bullish momentum has moderated rather than reversed.

The technical picture remains cautiously constructive as long as price holds above the €78.50 region, supported by the rising 50-day moving average. A sustained break above €81.43 would strengthen the bullish case and could trigger another leg higher. Conversely, a move below €77.91 would increase the likelihood of a deeper correction toward the 100-day moving average near €74.85, although the broader medium-term trend would remain intact unless that level is decisively broken.

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

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AFS ENERGY B.V.

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