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END OF DAY – Carbon tumbles EUR 2.50 to fresh 23-month low

(Montel) Europe’s benchmark Dec 24 EUA carbon contract fell by more than EUR 2.50 to reach a fresh 23-month low on Friday, with bearish indicators such as mild weather forecasts and weaker gas prices pressuring the contract lower.

The Dec 24 EUA contract was seen last down EUR 2.26 at EUR 58.52/t on Ice Endex.
Earlier in the session, it hit an intraday low of EUR 58.20/t, the lowest since March 2022.

The contract could extend losses next week amid an increase in auction supplies and mild temperatures that would curb fossil fuel demand for heating, analysts said.

“Milder weather across Europe and expected high auction volumes next week are weighing heavily on prices,” analysts at Northern Gas and Power said in a note.

In European gas markets, the benchmark Dutch TTF front-month contract hovered around a two-week low, with a mild weather outlook and a well-supplied market capping gains, said market participants.

The TTF March contract was last seen EUR 0.77 lower at EUR 27.03/MWh on Ice Endex.

Bearish picture
The current bearish picture for gas was such that there was very little on the horizon to suggest an increase in prices next week, said Jonathan Howells, head of trading at Eco Logic Partners.

“There’s nothing I can see that would cause the market to go up, especially with weather forecasts indicating mild temperatures,” he said.

“Prices will keep in a sideways trend and could even go lower.”

Healthy supplies of LNG would continue to flow into Europe next week, even as gas demand remained relatively low, said Howells.

Montel’s head of technical analysis, Tom Hovik, said technical signals suggested the front-month contract could face further downward pressure in the EUR 20s next week. 

Europe was expected to remain well supplied with LNG throughout the year, with imports potentially rising 15% this year to a historic high of 128m tonnes (174.5bcm), Montel reported earlier.

In European coal markets, meanwhile, the benchmark API 2 front-month contract last traded down USD 2.65 at USD 93.75/t on Ice Futures, while the front-quarter contract was USD 1.37 lower at USD 90/t.