Auction volume: 13.4 million EUAs, 4.3 million more than last week.

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Energy Fundamentals

This week's market narrative has shifted away from immediate supply fears and towards the future shape of the EU carbon market. The pause in US military action against Iran has eased concerns over disruptions in the Strait of Hormuz, leading to a sharp decline in both oil and European gas prices. With gas storage now standing at 55.4%, supply conditions continue to improve, reducing the energy-driven support that has underpinned EUA prices in recent months. As a result, the market has entered a more cautious, risk-off phase following several weeks of elevated geopolitical premiums. Attention has instead turned to Brussels, where negotiations on the next phase of the EU ETS have exposed deep political divisions. While several Member States, including Germany and Poland, are pushing for greater flexibility to protect industrial competitiveness, others such as Sweden argue that weakening the system would undermine Europe's long-term climate ambitions. At the same time, proposals to broaden carbon pricing across sectors, the continued debate around maritime emissions, and growing scrutiny of international trade impacts underline that the ETS is still evolving rather than being dismantled. Investors appear to be recognising this distinction, with many viewing the current reform discussions as an opportunity to improve the system rather than fundamentally reduce future carbon demand.

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For EUA prices, the coming week is likely to be driven primarily by political headlines rather than energy fundamentals. Softer oil and gas prices may continue to limit upside in the short term, but the market remains highly sensitive to signals emerging from the ETS reform negotiations. Should policymakers demonstrate that competitiveness measures will be accompanied by a credible long-term carbon framework, sentiment could stabilise quickly. Until greater clarity emerges, however, traders are likely to remain cautious, keeping EUA prices largely rangebound while awaiting the next major policy catalyst.

• Gas storage currently sits at 55.4% (July 25th, 2026)
• Oil Declines on US-Iran Pause as War Hits the Five-Month Mark
• European Gas Drops as Much as 8% as US Pauses Strikes on Iran
• Russia Says It Will End Diesel Export Ban When Market Recovers
• EU draws lessons from Belem, drafts sharper mandate for COP31
• Deep Divisions Mark the Start of EU Carbon Market Reform Talks
• EU ETS overhaul to challenge India’s steel exports
• Sweden “frustrated” by EU plan to weaken ETS, clashes with Germany and Poland
• Hidden carbon cost of inland shipping exposed while Germany bets on rivers to decarbonise
• EUAs drop for second day as traders adopt risk-off ahead of tense geopolitical weekend
• Scotland, Spain and Canada grapple with wildfires
• Investors see pollution plan silver lining in EU carbon overhaul

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Investment Funds

• Investment funds reduced their net short position to -43.12m EUAs on June 17th of July (vs. -50.33 EUAs on July10th).
• Gross short positions increased to -20.52mln  EUAs (vs.-19.25mln EUAs).
• Gross long positions decreased to 63.64 mln EUAs (vs. 69.58mln  EUAs).
  

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Market Prices

• Indicative Dec26 EUA Price: € 80.65
• Indicative Spot EUA Price: €79.72
• YTD Spot EUA Price: €76.31
• MTD Spot EUA Price: €80.17

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

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Technical Analysis

December 2026 EUAs remain in a constructive medium-term uptrend despite last week's rejection from the €86.90 resistance high. Price continues to trade comfortably above the 20-day moving average (€80.68), 50-day moving average (€78.99) and 100-day moving average (€75.40), confirming that the broader trend remains positive. The recent pullback has so far respected the €80.70–81.20 support zone, suggesting buyers continue to defend higher levels. The Bollinger Bands indicate that last week's rally briefly became overstretched after moving above the upper band, with price now returning within the bands. RSI has eased to around 69, remaining close to overbought territory, while CCI stays firmly positive, reflecting strong underlying momentum. MACD continues to trend higher and remains in positive territory, indicating that bullish momentum is still intact despite the recent consolidation.

The technical picture remains cautiously bullish while prices hold above the 20-day moving average at €80.68. A sustained break above €85.35 would strengthen the current uptrend and open the door for further gains. Conversely, a move below €78.99 would be the first indication that bullish momentum is beginning to fade, potentially leading to a broader consolidation phase.

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

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