By Mathew Carr
Dec. 1, 2020 — LONDON: More gains in EU carbon allowance futures are seen after a 24% jump in November.
Colder temperatures and low primary supply are seen stoking the further increases.
See this European minimum temperature forecast loop:
See this commentary from Redshaw Advisors from late Monday (subscribe below):
Price Action: After the indecision seen on Friday, it was one-way traffic higher today as carbon rose more than 3%. Further cold weather forecasts coupled with positive COVID vaccine news buoyed European equities and wider energy markets, pushing prices higher during early trading and above €29. A lull followed as EUAs moved sideways for a few hours but renewed buying interest in afternoon trading saw EUAs hit the day’s high at €29.40. Late afternoon weakness, lead by US markets, took some of the shine off as EUAs finished the day up 89c at €29.05.
Outlook: November has seen the EUA price climb more than a 24%. As we go into December, there are now only 2 weeks of auction supply left before the prolonged auction hiatus. This, coupled with the colder weather on the horizon, suggests further gains are the most likely scenario. We remain bullish.
EUA Closing price: €29.05
2020 average closing price: €24.24