Last week, the EU ETS recorded both daily and weekly losses on Friday, marking its narrowest weekly trading range of the year due to a significant sell-off

Geopolitical tensions and the potential for escalation could drive prices up if an incident occurs, while bearish factors such as falling oil and gas prices are also at play. However, there is a possibility of a sideway scenario as the European Commision announced last June that from today 24% of the total allowances will be placed in reserve if the number surpasses the threshold. This results in a reduction of the volume of allowances that Member States auction. Considering these opposing influences, a possible scenario of the EU ETS could lie between 66-72 range.

Auction volume: 11.75 million EUAs , 1.65  million less than last week

Energy Fundamentals

• Gas storage sits at 92.4% full on August 31st, compared to 91.3% on August 24th, 2024.
• Today is the first day the MSR starts taking allowances out of the market, as per the report published on the 1st of June 2024.
• Hostage deaths build pressure on Netanyahu for Hamas deal
• Norway returned gas prices in Europe to to the maximum
• Oil Prices Drops Below $80 per Barrel
• EU Maritime Regulation the next legislative piece
• New monitoring rules agreed for the EU ETS, including non-CO₂ emissions from the aviation sector.

Investment Funds

• The net short speculative position held by investment funds decreased to -4.79m EUAs on August 23th (vs. -6.8m EUAs on August 16th).
• Gross short positions decreased to -46.40m EUAs (vs. -49.02 m EUAs).
• Gross long positions increased to 41.6m EUAs (vs. 42.22m EUAs).

Market Prices:

• .Indicative Dec24 EUA Price: €70.25
• Indicative Spot EUA Price: €69.42
• YTD Dec24 EUA Price: €66.76
• MTD Dec24 EUA Price: €70.24

Chart A: December 2024 EUA Price (EUR)

Technical Analysis

EUAs are currently trading close to a very strong support level, around the MA50 at 69.538 and the 50.0% Fibonacci level at 69.45. If the price manages to close below 69.45, it is possible that we will see a further downside movement towards the 61.8% Fibonacci at 68.25. Another possible scenario is that EUAs will rebound from this level and advance towards the 38.2% Fibonacci level at 70.70. An upside movement is currently supported by the CCI and FSI oscillators as well, with both entering oversold territory.

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

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