EU Carbon At Fresh 2010 High After Weak Open
Author: Nina Chestney
European carbon emissions permits rose on Monday to a fresh high for 2010 after a weak opening, with market confidence buoyed by an improved economic outlook, traders said.
EU Allowances for December delivery rose as high as 14.75 euros a tonne, up 33 cents or 2.3 percent, a new high for 2010. The benchmark contracts were trading at 14.60 euros at 1050 GMT on heavy volume of nearly 9,000 lots traded.
The market has been rallying since the release of EU verified emissions data on April 1, gaining almost 15 percent, underpinned by higher energy prices, although oil fell on Monday.
An emissions trader said EUAs' early fall was due to some participants correcting the previous session's gains.
Technicals suggested a correction may be due with the RSI rising to 76.6, the highest level since May 2007, implying the futures may now be overbought.
The futures also bounced off a long-term bearish trend line at 14.75 euros.
By mid-morning, sellers had been overpowered by players who were trying to push prices higher, the trader added.
"(Prices) could reach 15 euros by the end of the day," another trader said.
On Friday, EUAs rose to a high of 14.56 euros as utilities bought permits to bank for future use and financial buyers shook most sellers out of the market, traders said.
Participants might also prefer to save EUAs for the future instead when prices are expected to be higher. Analysts polled by Reuters expect prices to increase to up to 24 euros in 2011.
Certified emissions reductions gained 19 cents or 1.5 percent at 12.87 euros a tonne, setting the EUA-CER spread at around 1.75 euros.
German Calendar 2011 baseload power on the EEX was down 4 cents at 49.10 euros per megawatt hour.
Oil prices sank to a three-week low below $81 a barrel as risk appetite soured across the board after investment bank Goldman Sachs was charged with fraud.
The European Commission on Monday approved new carbon emissions quota of 208.5 million tonnes a year for Poland, ending a long dispute.
Poland had originally requested 284.6 million a year of the permits under the European Union's Emissions Trading Scheme, but this was scaled down by the Commission.
On Friday, the European Commission approved another amendment to its registries regulation, putting an end to the recycling of CERs both in and outside the EU's Emissions Trading Scheme.
The move, which is understood to involve CERs surrendered for compliance being put in a retirement account, is being applied from Monday, the Commission said.
(Editing by Keiron Henderson)