Last week, the benchmark contract settled at its lowest point since July 23, 2021, signalling a continuation of the sustained bearish trend in the EUA market since the beginning of the year. With a weekly loss of 8.7%, market sentiment remained bearish during the previous week.

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

Looking ahead, market fundamentals continue to lean towards the bearish side, with EUAs and Dutch TTF trading at their lowest levels in more than two years. At the same time, we are seeing increased buying interest at these levels, leading to heightened purchasing activity whenever the price dips. For this reason, we expect EUAs to continue trading sideways for the week, keeping within the 50-55 range. Nevertheless, a break below 50 would signal a potential continuation of the existing downward trend.

On February 22, gas storage levels recorded at 64.1% full saw a slight decrease from the previous week's 65.7% on February 15. The TTF (Title Transfer Facility) price on Friday settled around 22.90 €/MWh, marking its lowest point since April 30, 2021. In a significant development, Western Europe has successfully severed direct Russian oil imports, indicating a permanent shift in energy dynamics. Unseasonably warm weather is expected to persist across the Nordic region and eastern Europe well into the upcoming week. Meanwhile, oil prices continue to decline as the dollar strengthens amidst changing interest rate expectations. Despite efforts, the Carbon Border Adjustment Mechanism (CBAM) appears to have limited efficacy in curbing additional emissions.

Technical Analysis

The Relative Strength Index (RSI) presently signals an oversold condition, potentially suggesting a price rebound to €54 initially, followed by a move towards €56, as indicated by Fibonacci retracement levels. Friday's session concluded with a hammer candlestick, adding to the bullish sentiment, yet confirmation requires a close above 53.50. An optimal entry point appears to be around €51.7, supported by its repeated testing without sustaining a lower level so far. However, considering fundamental factors, a close below €51.70 may indicate significant support at €50, aligning with the lower boundary of the Bollinger Bands.

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