EU Carbon Down 2.5 PCT On Power, Gas As Bears Weigh
LONDON - European carbon futures fell by over two percent on Thursday morning, pulled lower by weaker German power and British natural gas prices as wider bearish signals weighed, traders said.
EU Allowances for delivery in December opened slightly weaker, then dropped as low at 13.03 euros a tonne, down 34 cents or 2.5 percent. The benchmark futures also broke below their 50-day moving average.
Spot EUAs were down 33 cents or 2.5 percent at 12.83 euros, dropping below 13 euros for the first time since January 13.
"German power and gas are off a bit so it's no surprise we're lower," said one trader.
EUAs fell by over three percent to 13.37 euros on heavy volumes on Wednesday, closing below key technical levels after hitting a 1-month high on Tuesday.
German baseload power slipped by 10 cents at 49.60 euros a megawatt hour while British front-end gas futures lost 0.56 pence or 1.6 percent at 34.35 pence per therm.
Oil climbed above $78 after strong Chinese growth data offset bearish sentiment following a World Bank outlook highlighting risks that the global economic recovery may run out of steam.
Traders said the recent rally in EUA prices had run out of steam and that prices could move even lower following wider bearish signals and lack of buying support.
Weak results from a German EUA futures auction on Wednesday afternoon carried bearish tones for the market, as did the UN's climate chief saying yesterday he didn't expect most countries to meet a January 31 deadline to submit emissions pledges under the Copenhagen Accord.
The failure of U.S. democrats to keep their Senate supermajority, which will indefinitely delay the launch of a federal cap and trade market and put more reliance on the country's regional schemes, does not bode well for long-term prices.
Benchmark CER prices fell 14 cents or 1.2 percent at 11.52 euros a tonne, setting the EUA-CER spread at around 1.50 euros.