European carbon prices rebounded on Thursday following the rise on the energy-related markets as the latest weather forecasts indicated lower temperatures than previously expected and less favorable weather conditions for renewable generation, mainly wind power generation.

Carbon prices for Dec’23 contract traded in a range of €75,19 to €77,69 before closing at €77,38 and posting a daily gain of €1,68, the largest in a month. The EUAs closed higher for the second consecutive session, following the one-year low also reached this week.

 The upward trend in carbon prices reflected higher energy-related markets. Both coal and gas prices increased with TTF front-month prices posting a 5,14% daily gain. Energy prices also took directions from fossil fuels, with the German Dec’23 contract  higher by 5,82% after slipping to its lowest since January 2022 in the previous session.

 

“The downward revision of weather forecasts is a main driver here,” according to a trader quoted by Montel News. In fact, according to data released by Energy Quantified, temperatures were revised down by 1.20C for Germany, Europe’s largest gas consumer. Temperatures are also expected to remain between 1.80C and 4.10C below average for next week in the Nordic area.

 

However, on Friday, early trading data suggests that the rebound in carbon prices could be short-lived. The EUAs were trading as low as €86,15 while gas prices are also on a downward trend.