Last week, EUAs hit 74.75 EUR before experiencing a three-day decline, slipping to 70.62 EUR amid low volatility and light trading volumes as bearish fundamentals impacted the market.

This week holds potential for interesting developments. Geopolitical tensions and the risk of escalation could push prices higher if something happens, while bearish factors like weak power generation and low-cost renewables persist. Given these opposing forces, the ETS may remain in the 70-75 EUR range until one of these dynamics is resolved.

Auction volume: 13.4 million EUAs , 2.3  million more than last week

Energy Fundamentals

• Gas storage sits at 91.2% full on August 24th, compared to 89.4% on August 17th, 2024.
• The EU reaches its winter gas storage target weeks ahead of schedule.
• Israel and Hezbollah in major missile exchange
• Currently, no fear of escalations in Middle East region
• North Korea's Kim Jong Un oversees tests of 'suicide drones'
• The Greek-flagged ship Sounion has been on fire since Aug. 23 after an attack by Yemen's Houthis
• Oil climbs on Mideast escalation fears

Investment Funds

• The net short speculative position held by investment funds decreased to -6.8m EUAs on August 16th (vs. -14.9m EUAs on August 8th).
• Gross short positions decreased to -49.02 m EUAs (vs. -50.63 m EUAs).
• Gross long positions increased to 42.22  m EUAs (vs. 35.73m EUAs).

Market Prices:

• .Indicative Dec24 EUA Price: €70.26
• Indicative Spot EUA Price: €69.37
• YTD Dec24 EUA Price: €66.61
• MTD Dec24 EUA Price: €71.39

Chart A: December 2024 EUA Price (EUR)

Technical Analysis
On the daily chart, we can see a crossing of the EMA with the middle of the Bollinger Bands, signalling a potential trend reversal. This is also strengthened by the CCI slowly moving into oversold territory. If the price breaks the Fibonacci 23.6% level at 71.73 EUR, we might see an increase towards 73 EUR, which acts as a strong psychological level. If the price drops below the 100MA at 71.089, and then below the important psychological level at 70, the next strong support is the 38.5% Fibonacci level at 67.85 EUR.

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

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