Last Friday, EUAs reached a six-week low of 68.17 EUR. The benchmark contract registered a 3.4% decline for the day and a total weekly loss of 4.4%, ultimately settling at 68.28 EUR. It appears that EUAs have slightly diverged from their correlation with Dutch TTF.

Looking ahead, there is a chance that record high temperatures and concerns over the EU's gas supply might push the market upwards again. Conversely, renewable energy output is at record highs, pushing French energy prices into negative territory. For these reasons, one possible scenario is that the market trades sideways for the week, waiting for additional news to confirm its future direction.

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Auction volume: 13.4 million EUAs, 2.3 million more than last week.

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Energy Fundamentals:

• Gas Storage: As of June 15, gas storage is at 73.2% full compared to 73.4% on June 15, 2023. Despite robust storage levels, Europe might still face gas supply risks.

• Renewable Energy Impact: EU solar battery storage has doubled for three consecutive years. Electricity prices in France have gone negative as renewable energy floods the grid, forcing some nuclear reactors to power down.

• Temperature Forecast: Europe is set to face record high temperatures over the summer, potentially impacting energy demand.

• Geopolitical Shifts: In May, Russia overtook the US as the leading gas supplier to Europe for the first time in two years.

• Oil Market: Oil opened lower on weak US consumer demand

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Investment Funds:

• Speculative Positions: The net short speculative position held by investment funds increased to -9.87 million EUAs on June 7th (vs. -8.05 million EUAs on May 31st).

• Gross Positions: Gross short positions decreased to -50.63 million EUAs (vs. -52.16 million EUAs), while gross long positions decreased to 40.77 million EUAs (vs. 44.11 million EUAs).

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Market Prices:

• Indicative Dec24 EUA Price: € 67.60

• Indicative Spot EUA Price: € 66.17

• YTD Dec24 EUA Price: €65.51

• MTD Dec24 EUA Price: €71.07

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Chart A: December 2024 EUA Price (EUR)

Technical Analysis

Analysing the downtrend channel, the price might move towards the upper range of the channel, approximately around 70 EUR. The MACD and FSI indicators are currently supporting this potential movement. However, this does not necessarily indicate a bullish setup. For a bullish trend to be confirmed, the price needs to break above 71.60 EUR, which corresponds to the 23.6% Fibonacci retracement level. If the price closes below 67.75 EUR today, it could suggest that the 65 EUR level might be reached sooner than anticipated.

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Chart B: December 2024 EUA Price (EUR) - Technical

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