Previous Week Events:

In the previous week, EUAs registered a total gain of 6.5%, following a strong rally that began on Thursday. EUAs moved in correlation with Dutch TTF gas prices, with their reaction driven by Donald Trump's victory in the U.S. election, which sparked renewed interest in gas amidst decreasing demand for renewables.

For this week, there is a possible scenario where prices could initially post slight gains, as momentum is currently strong and Russia prepares a large-scale offensive to retake the Kursk region from Ukraine. However, with news that Russia is ready to discuss a continuation of its gas deal and gas supply remaining healthy, momentum may start to fade. As a result, there is a possibility that EUAs edge higher at the beginning of the week, before potentially experiencing a price reversal towards the end.

Auction volume: 12.6 million EUAs, 2 million less than last week

Energy Fundamentals

• Gas storage sits at 93.6% full on November 9th, compared to 95.2% on November 2nd, 2024.
• According to US officials, Russia has amassed around 50 000 troops, including North Korean soldiers, around the Kursk region, possibly launching a large-scale attack on Ukrainian positions in the following days.
• The EU might start buying more LNG from the US in an attempt to avoid export tariffs from the latter.
• Russia’s prime minister said they are ready to continue supplying gas to Europe via Ukraine.
• In her speech at the the Renewable Hydrogen Summit, European Commission President Ursula von der Leyen said that investment in European hydrogen is set to grow by 140% in 2024.
• Oil prices are little changed as the US storm threat diminished, China stimulus fails to impress.

Investment Funds

• The net short speculative position held by investment funds decreased to -10.56m EUAs on November 1st (vs. -15.07m EUAs on October 25th).
• Gross short positions decreased to -49.87m EUAs (vs.-56.47m EUAs).
• Gross long positions decreased to 39.31m EUAs (vs. 41.4m EUAs).

Market Prices:

• Indicative Dec24 EUA Price: €68.27
• Indicative Spot EUA Price: €68.00
• YTD Dec24 EUA Price: €66.29
• MTD Dec24 EUA Price: €65.2

Chart A: December 2024 EUA Price (EUR)

Technical Analysis

From a technical point of view, EUA Dec24 prices have recently broken through the 38.2% Fibonacci level at 67.77 EUR. The CCI is currently in overbought territory, while the RSI is in overbought territory on the hourly chart, and it is gradually approaching overbought levels on the daily chart as well. As a result, there's a possible scenario that the price may shortly keep trading above the 38.2% Fibonacci level. However, as the week progresses, a reversal could be expected, with indicators signalling an impending overbought condition and moving averages, along with the middle of the Bollinger Bands, positioned below the current price. If the price falls below 67.77 EUR, key support levels to watch include the MA (100) at 67.16 EUR, the middle of the Bollinger Bands at 64.85 EUR, and the 50% Fibonacci level at 64.59 EUR.

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

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