Last week, EU carbon allowances (EUAs) held steady amidst challenging energy trends, with compliance operators strategically seizing opportunities near a 15-month low. A temporary pause in US LNG exports drove EUA prices up, following a spike in Dutch TTF prices.

Auction volume: 11.1 million EUAs, 2.3 million less than last week. 

Looking forward, the market is expected to maintain its sideways trajectory, guided by renewed buying activity from compliance operators at recent lows. Factors like colder-than-expected weather forecasts, geopolitical tensions in the Middle East, and the US ban on LNG exports are expected to fuel significant price volatility.

The auction volume decreased to 11.1 million EUAs, down by 2.3 million from last week. Gas storage levels dipped to 68.79% full by February 1, while the US energy sector braced for a significant -31.4% earnings decline in Q4. Mild weather is forecasted until February 10, with the potential for a cold snap after that, impacting demand fluctuations.

Italy's investment in Enel's solar panel production aims to bolster renewable energy efforts. Brent Crude Futures turned bearish, signalling evolving trends that may influence EU ETS trading patterns.

The outlook for the EU ETS market remains sideways, with prices expected in the lower 60-65 range. Recent indicators show an indicative Dec24 EUA price of €62.90, with notable variations in YTD and MTD prices, highlighting market volatility. 

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‍Technical Analysis

The current forecast suggests relative calmness, with indicators showing no sustained downward pressure on prices. Traders anticipate additional indicators to fuel a rally after experiencing overselling. With slightly lower trading volume compared to the previous week, the market is likely to continue moving sideways until significant news disrupts its state.

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AFS ENERGY B.V.

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