Despite the cold weather conditions spread across large parts of the continent, energy-related markets retreated in yesterday’s session as weather forecasts changed significantly during the weekend indicating milder temperatures later this week in central Europe.

“Europe’s energy complex corrected down on Monday, led by sliding gas prices as forecasts pointed to milder weather to year end,” noted Montel News. TTF front month briefly traded below €40, a level last seen in early October.

As expected, carbon prices traded in line with movements in the gas market. EUA Dec’23 contract reached another one year low at €70,14 before settling the session at €70,37, dropping 3% compared to Friday’s close.

Besides weather conditions, another significant factor contributing to the downward trend observed recently in gas and carbon markets, is the weak demand from the industry sector for both commodities. Ridiculously high gas prices observed in the past two years forced steel, aluminum, and fertilizers facilities to shut down or substantially limit their operations.  

According to a chart published by ICIS on Monday, gas demand from the European industry sector has increased by 9% in November compared to the same period last year. However, so far in 2023, it is 5% below last year’s demand and 24% below the five-years average.

On the carbon market, “experts predict that industrial emissions of greenhouse gases in the EU Emission Trading System have fallen by around 7% in 2023 compared to 2022 levels”, wrote carbon analyst Alessandro Vitelli warning that less demand for EUAs would cause prices to drop even further.