Last week, EU ETS prices marked their sixth five-day losing streak in the past seven weeks, with bearish sentiment continuing to dominate the market.

This  week, there is a possibility that the  EU ETS prices could go further down, driven by an oversupply of allowances, coupled with reduced demand as fossil fuel consumption, particularly coal, has dropped across the EU. Additionally, a surplus in gas storage has kept pressure on prices, reinforcing the bearish economic sentiment. demand.  However, geopolitical risks, such as the potential for Israeli counterattacks on Iranian oil facilities, could push prices upward. Looking ahead, colder weather might increase energy demand, which could drive a recovery in carbon allowance prices.

Auction volume: 14.6 million EUAs, 2.8 million more than last week

Energy Fundamentals

• Gas storage sits at 94.4% full on October 5th, compared to 94.2% on September 28th, 2024.
• Europe has a duty to lead the green transition
• IFC lends $534M to ENGIE to boost renewable energy in emerging markets
• EU’s Industrial Future: Powered by Affordable Green Energy
• Attacks on Iranian oil could cause another European energy crisis
• Oil bets are most bullish in two years as Mideast tension flares

Investment Funds

• The net short speculative position held by investment funds decreased to -16.23 m EUAs on September 27th (vs. -23.29m EUAs on September 20th).
• Gross short positions decreased to -62.04m EUAs (vs. -71.76m EUAs).
• Gross long positions remained almost flat at 45.81 m EUAs (vs. 48.47m EUAs).

Market Prices:

• Indicative Dec24 EUA Price: €60.80
• Indicative Spot EUA Price: €60.36
• YTD Dec24 EUA Price: €66.5
• MTD Dec24 EUA Price: €62.39

Chart A: December 2024 EUA Price (EUR)

Technical Analysis

From a technical perspective, EUAs are moving on a downtrend, having dropped below their 61.8% Fibonacci level at 61.40 EUR. With Stochastics, CCI and MACD all in oversold territory, it is possible that we see a price rebound, especially if EUAs will close the day above 61.40 EUR. If that happens, we can expect a recovery towards 64.59 EUR, which currently coincides with the 50% Fibonacci level and the middle of the Bollinger Bands. However, if strong downloads momentum continues and the price closes below 61.40 EUR, there is a chance we see it dropping further towards the 50% Fibonacci level at 57.45 EUR, which currently acts as the next strong support.

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

AFS ENERGY B.V.

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