The Coal Trader

European CO2 market hits 2-week high on geopolitical pressure

Europe’s benchmark carbon price reached a two-week high on Tuesday as a mixture of geopolitical and fundamental factors tightened the market.

The Dec 24 EUA contract last traded up EUR 0.59 at EUR 64.10/t, the highest level seen since 26 March, when prices hit EUR 65.78/t.

A potential retaliation by Iran for the Israeli bombing of its consulate in Syria could be prompting traders to take off risk from short positions, while industrial production from Germany was “stronger than expected”, Stefan Feuchtinger, Vertis head of market research, told Montel.

“Overall, the fundamentals have not changed much, so we would expect more downside after this uptick, at least if Iran’s retaliation does not lead to a strong escalation,” he added.

Gas retreats
Meanwhile, after three sessions of consecutive growth, gas prices ticked down slightly due to increased supply and healthy stocks across the EU, as well as bearish weather forecasts.

The benchmark front-month contract on the Dutch TTF hub last traded down EUR 0.32 at EUR 27.58/MWh on Ice Endex.

Gas flows from Norway to Europe were last pegged at 330.1mcm/day, according to Gassco, up from 326.3mcm/day yesterday.

EU stocks were last seen at just over 60% of capacity, according to Gas Infrastructure Europe. This is an increase of 3 percentage points from last week, indicating widespread restocking is underway, and a rise of 5 percentage points on this time last year.

This comes amid a warm spell throughout Europe limiting gas demand for heating, with temperatures currently up to 2C above the seasonal norm and set to rise to 5-8C above the norm at the weekend, data from Montel’s Energy Quantified (EQ) showed.

However, temperatures were due to flip to 3C below normal next week, according to EQ.

This was set to occur against a backdrop of limited LNG deliveries, which in recent days appeared to be extending a slump underway since December, Joachim Endress of Berlin-based consultancy Ganexo told Montel earlier.

In the coal market, prices traded relatively flat, with the benchmark front-month API 2 contract last seen down USD 1.15 at USD 115.25/t on Ice Futures.

By Gabriel Power