Last week, EUAs settled flat, posting a total decrease of 0.2%. This indicates that EUAs have resumed their correlation with Dutch TTF, which was temporarily interrupted by the June option expiry on Wednesday.

Looking forward, the fundamentals are mixed, with record renewable energy production on one hand and extreme weather conditions on the other. The latter, in tandem with political instability, is likely to bring significant volatility to energy markets. One possible scenario is that the market follows a sideways to bearish trajectory for the week, with strong bursts fuelled by news of political developments and severe weather events.

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

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Energy Fundamentals:

• Gas Storage: As of June 22, gas storage is at 75.1% full compared to 75.2% on June 22, 2023.

• Solar Power Impact: Europe’s solar power surge is hitting prices, exposing storage needs. France added record solar capacity in Q1 2024, up 66% from last year.

• Political Concerns: Engie CEO warns of drastic consequences if France’s far right continues with plans to exit the EU Power Market.

• Weather Conditions: Extreme weather is hitting Europe with severe heatwaves and thunderstorms.

• Geopolitical Concerns: Brent prices stabilize and look for a possible monthly advance on renewed geopolitical concerns.

• Policy Updates: EU Member States’ National Climate and Energy Plans (NECPs) are set to be published on June 30

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Investment Funds

• Speculative Positions: The net short speculative position held by investment funds increased to -13.63 million EUAs on June 14th (vs. -9.87 million EUAs on June 7th).

• Gross Positions: Gross short positions increased to -51.14 million EUAs (vs. -50.63 million EUAs), while gross long positions decreased to 37.51 million EUAs (vs. 40.77 million EUAs

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Market Prices:

• Indicative Dec24 EUA Price: €67.40

• Indicative Spot EUA Price: € 66.01

• YTD Dec24 EUA Price: €65.63

• MTD Dec24 EUA Price: €70.5

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Chart A: December 2024 EUA Price (EUR)

Technical Analysis

EUAs continue to follow a descending channel that began forming at the end of May. Both the MACD and CCI indicators suggest there is still room for further decline, whereas the RSI shows uncertainty regarding the future direction. The crucial support level for today and tomorrow is at 65.8 EUR on the DEC24 price. If this level is breached, we might see the price fall to the 62-60 EUR range. To indicate a potential trend reversal, the price would need to break above 68.6 EUR.

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

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