On Friday, EUAs registered a 1.2% increase for the day, offsetting a 1.7% decline for the week. Given the strong correlation with TTF over the week, Friday’s rise could also be attributed to short covering ahead of the weekend.

For this week, there is a potential scenario where EUAs could slightly rise due to renewed supply risks for natural gas and extreme temperatures continuing through the week, which could lead to possible power outages. Given that volumes are significantly lower during summer months, there is a chance that EUAs will trade in a sideways range, with some potential for bullish upticks.

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Auction volume: 13.4 million EUAs, 1.4 million more than last week.

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Energy Fundamentals:

• Gas Storage: As of July 13, gas storage is at 80.8% full, unchanged from July 13, 2023.

• Free Allowances: By July 11, the 27 EU countries have issued a total of 392.53 million free allowances to heavy industry and heat producers, representing 76.5% of the total available for this year.

• Weather Impact: Extreme temperatures are expected to continue throughout the week, with some areas in Europe reaching temperatures high enough to affect oil refining capacities.

• Gas Supply Risks: Gas prices might rise as supply risks resurface.

• Oil Market: Oil strengthens following geopolitical tensions after the attack on Donald Trump.

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Investment Funds:

• Speculative Positions: The net short speculative position held by investment funds decreased to -17.49 million EUAs on July 5th (vs. -21.22 million EUAs on June 28th).

• Gross Positions: Gross short positions decreased to -54.75 million EUAs (vs. -56.15 million EUAs), while gross long positions increased to 37.26 million EUAs (vs. 34.93 million EUAs).

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Market Prices:

• Indicative Dec24 EUA Price: €67.85

• Indicative Spot EUA Price: € 66.65

• YTD Dec24 EUA Price: €65.97

• MTD Dec24 EUA Price: €69.22

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Chart A: December 2024 EUA Price (EUR)

Technical Analysis

The RSI and FSI are gradually signalling a potential change in direction on the daily chart. However, for confirmation, the price must first break the Fibonacci level at 38.2%, which is at 67.75 EUR. On the 15-minute chart, the MACD suggests a possible small drop, but a quick recovery is expected. Regarding resistance levels, the price must first break the strong psychological barrier at 70 EUR. After that, the next target is the 50-day moving average, which is currently at 70.97 EUR.

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

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