Previous Week Events:

In the previous week, EUAs recorded their biggest gain in six months following a surge in gas prices on news of a production halt in Norway and geopolitical uncertainty. Furthermore, following a red weekly candlestick, the CoT on Wednesday didn’t show too big of a movement in short positions

Looking ahead, there's a possibility for mixed outcomes, with Dutch TTF prices continuing to rally, as EUAs might keep moving in close correlation with it. Although we have seen significant increases over the past week in both Dutch TTF and the EU ETS, their upwards momentum seems to have cooled following a mild response from Iran regarding Israel’s retaliation. Although gas reserves are healthy and geopolitical tensions have slightly eased, there is still bullish momentum for energy markets. For these reasons, a possible scenario is that the market moves sideways for the week, awaiting further news to confirm its direction.

Auction volume: 11.7 million EUAs, 2.8 million less than last week

Energy Fundamentals

• Gas storage sits at 95.5% full on October 26th, compared to 95.2% on October 19th, 2024.
• Iran said it will respond to Israel’s attack on its military facility this weekend without seeking a war, partially easing concerns over an all-out war.
• EU Invests €4.8 Billion in Decarbonization Projects Funded Through Carbon Pricing System
• European Investment Bank ink a 650 million loan for Energy Island in the North Sea
• Dutch TTF is moving higher on news of a production halt in Norway and geopolitical uncertainty
• Oil prices fall after Israel refrains from attacking Iran’s refining facilities

Investment Funds

• The net short speculative position held by investment funds remained flat at -24.33 m EUAs on October 25th (vs.  -24.1m EUAs on October 18th).
• Gross short positions remained flat at -64.76m EUAs (vs. -65.72m EUAs).
• Gross long positions increased to 40.53m EUAs (vs. 41.62m EUAs).

Market Prices:

• Indicative Dec24 EUA Price: €65.16
• Indicative Spot EUA Price: €64.81
• YTD Dec24 EUA Price: €66.32
• MTD Dec24 EUA Price: €63.5

Chart A: December 2024 EUA Price (EUR)

Technical Analysis

From a technical perspective, the RSI and CCI oscillators are currently decreasing from their overbought levels. With the MACD in neutral territory, these elements could signal a potential continuation of a downward movement. The first essential level to watch is the 50% Fibonacci at 64.59 EUR. If the price closes below that, we could see a further downside movement towards the lower end of the Bollinger Bands and the Fibonacci 61.8% level at 61.40 EUR. On the upside, if the price goes beyond the MA50 (65.85), the MA100 (67.48) and the Fibonacci 38.2% level at 67.77 EUR, we might see a continuation of an uptrend. Although the market looks slightly overbought, it has also enjoyed strong buying momentum, which is why there is a possible scenario that EUAs will trade sideways for the week.

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

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