Last week, the EU ETS hit its lowest level in the last seven weeks, registering a total weekly decline of 2%.

For this week, there is a possible scenario that EUAs will trade in a sideways range, as energy fundamentals are weak and investment funds are seen rebuilding their short positions, while, in contrast to the former, technical analysis points to a potential price recovery. As the economic outlook is bearish, there is a chance that the market will price in a lower demand for emissions in the future, fuelling the current decline. However, as we are close to the compliance deadline and the operators are entering winter preparations, higher volumes are expected, with potential for a renewed buying interest.

Auction volume: 12.7 million EUAs , 1.9 million less than last week

The compliance period for 2023 concludes on 30 September 2024. To avoid potential compliance-related penalties, please consider this deadline when placing your order. Under no circumstances can AFS be held responsible for fines resulting from late deliveries by AFS.

Energy Fundamentals

• Gas storage sits at 93.3% full on September 14th, compared to 92.9% on September 7th, 2024.
• The positions of hedge funds in European natural gas are having a major impact on price volatility
• Saudi Arabia calls for more pressure on Iran as tensions rises
• Europe Solar Energy Market Expected Continues Growth
• Electricity prices fell into negative territory
• Southern Europe’s electricity prices up to five times higher due to increase in demand natural gas
• EU Commission approves Belgium's aid scheme to support offshore
• Oil prices climb on Fed rate cut outlook

Investment Funds

• The net short speculative position held by investment funds decreased to -14.24m EUAs on September 6th (vs. -6.67m EUAs on August 30th).
• Gross short positions increased to -54.53m EUAs (vs. -47.03 m EUAs).
• Gross long positions remained almost flat at 40.29m EUAs (vs. 40.37m EUAs).

Market Prices:

• Indicative Dec24 EUA Price: €63.99
• Indicative Spot EUA Price: €63.34
• YTD Dec24 EUA Price: €66.73
• MTD Dec24 EUA Price: €66.66

Chart A: December 2024 EUA Price (EUR)

Technical Analysis

From a technical perspective, we see that EUAs are moving in a downwards channel, having broken the Fibonacci 50% level at 64.59 EUR today. At this point, both the MACD and the Stochastics oscillator are entering oversold territory, pointing towards a potential price recovery on the daily chart. This is further supported by the fact that the current price is trading at a significant distance below its 20, 50 and 100 Moving Averages and the middle of the Bollinger Bands. However, a close below 64.59 EUR might signal a further decline towards the Fibonacci 61.08% level at 61.40 EUR.

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

AFS ENERGY B.V.

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