In the previous week, EUAs posted their first weekly gain since late May, registering a 0.4% rise for the day and a 4.3% increase for the week at Friday’s settlement. For this week, there is a possibility that the current fundamentals will support a sideways to bullish market movement. Record renewable uptake, discussions over replacing Russian gas with Azeri gas, and the left party winning the elections in France all support this scenario. However, the continuance of extreme weather conditions across Europe could cause significant volatility, potentially leading to short-term price swings throughout the week.

‍

Auction volume: 12 million EUAs, 1.4 million less than last week.

‍

Energy Fundamentals:

• Gas Storage: As of July 6, gas storage is at 78.8% full compared to 78.9% on July 6, 2023.

• Renewable Energy Surge: Renewables made up more than 50% of the EU’s total power generation in H1 2024, setting a new record.

• Weather Impact: Severe weather continues, with heatwaves intensifying through Southern and Eastern Europe.

• Power Prices: EU power prices are set to remain high under the net-zero scenario.

• Political Developments: The French left leads the election while the far right places third, signaling potential for stronger climate policy.

• Energy Supply: Ukraine is in discussion to supply Azeri gas to the EU as a replacement for Russian gas.

• International Collaboration: The EU is set to collaborate with India for a smooth implementation of CBAM.

• Asian Market: Asia LNG spot prices decline on weak Chinese demand.

‍

Investment Funds:

• Speculative Positions: The net short speculative position held by investment funds increased to -21.22 million EUAs on June 28th (vs. -18.20 million EUAs on June 21st).

• Gross Positions: Gross short positions increased to -56.15 million EUAs (vs. -50.43 million EUAs), while gross long positions increased to 34.93 million EUAs (vs. 32.23 million EUAs).

‍

Market Prices:

• Indicative Dec24 EUA Price: €71.27

• Indicative Spot EUA Price: € 69.96

• YTD Dec24 EUA Price: €65.85

• MTD Dec24 EUA Price: €69.98

‍

Chart A: December 2024 EUA Price (EUR)

Technical Analysis

The downtrend channel was broken last week. Technically, the first support level is at 69.80 EUR. If this support is broken, it will likely be a temporary dip. The MACD indicates slight bullishness, but this is not confirmed by the RSI and CCI. The chart's lowest point appears to be around 66.20 EUR, where the 100-day moving average intersects with the lower Bollinger Band. However, based on the current technical analysis, reaching this level seems unlikely.

‍

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

‍

AFS ENERGY B.V.

The information contained in the AFS Energy EU ETS Report, hereinafter Report, has been compiled or arrived from sources believed to be reliable but no representation or warranty, express or implied, is made as to their accuracy, completeness, timeliness, correct sequencing or correctness.

AFS Energy B.V. does not accept any liability, contingent otherwise for (i) the accuracy, completeness, timeliness or correctness of any information provided in the Report, (ii) any decision made, or action taken by you in reliance upon any of them and (iii) any direct or consequential loss arising from the use of the Report. AFS Energy B.V. does not make any representation or warranty about the suitability of the information in the Report.

The information contained in the Report is published for the assistance of the recipient but is not to be relied upon as authoritative or taken in substitution for the exercise of judgement by any recipient.