Previous Week Events:

Last week, EU ETS prices showed a bullish sentiment, with an overall weekly gain of 4% . However, the EU ETS is still mainly driven by bearish fundamentals.

This week, there is a possible scenario that the EU ETS experiences downward pressure due to ease in gas prices, driven by lower industrial demand, healthy gas storage, and weaker economic sentiment, such as reduced demand in European power. However, expectations of colder weather for the next few months has led to a rise of long positions for Dutch TTF, which might also impact the EU ETS. Geopolitical risks, like potential Israeli strikes on Iranian oil facilities and concerns over Russia's possible attacks on Ukraine’s nuclear intentions, could also lead to significant price volatility.

Auction volume: 13.6 million EUAs, 1 million less than last week

Energy Fundamentals

• Gas storage sits at 94.8% full on October 17th, compared to 94.3% on October 10th, 2024.
• Ukraine appeals for EU help, fearing Russian nuclear plant strikes.
• Global Renewable Energy Capacity Reaches 3.9 TW In 2023, Falling 1.5 TW Short Of 2030 Goals – Report
• Net-long positions on Dutch TTF increase as Europe heads into winter.
• European Gas Prices Fall As Supplies Remain Steady
• Oil prices drop on concerns China's flagging economy to limit demand

Investment Funds

• The net short speculative position held by investment funds decreased to -26.18 m EUAs on October 10th (vs.  -19.28m EUAs on September 27th).
• Gross short positions increased to -66.47m EUAs (vs. -63.22m EUAs).
• Gross long positions decreased to 40.28 m EUAs (vs. 43.94m EUAs).

Market Prices:

• Indicative Dec24 EUA Price: €65.53
• Indicative Spot EUA Price: €65.10
• YTD Dec24 EUA Price: €66.43
• MTD Dec24 EUA Price: €62.74
• Chart A: December 2024 EUA Price (EUR)

Technical Analysis

From a technical point of view, the EUA Dec24 contract is currently trading around its 50% Fibonacci level at 64.59 EUR. With the MACD still in oversold territory and the MA50 (67.37) and MA100 (68.70) both above the current level, there is a chance that the price might continue its uptrend towards 67 EUR and then to the 38.2% Fibonacci level at 67.77 EUR. However, a close below the 50% Fibonacci level might drive EUA prices towards the 61.8% Fibonacci level at 61.40 EUR, and towards the lower end of the Bollinger Bands. One possible scenario is that EUAs will trade in a sideways to bullish range for the week, waiting for new data to determine their next move.

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

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