The European carbon market saw another day with falling prices on Wednesday. The EUAs closed the session at €63,15, a level last seen on 7 March 2022, when prices dropped in the aftermath of the Russian invasion of Ukraine.

Yesterday’s decline was attributed to “a sustained and aggressive selling in the afternoon after a flat morning session,” as stated by Carbon Pulse. The Commitment of Traders report which was released yesterday for the week ending on January 12 showed investors have raised both their long positions (+ 1,4 million allowances) and their short positions (+10,2 million allowances) compared to the previous week.

However, speculative investors have built their biggest net short positions on emission allowances in a month to 28,8 million allowances, from just 20 million allowances recorded at the end of the previous week, a massive build in bets for falling prices.

The correlation between carbon and gas prices was also a dominant factor for EUAs, with TTF front month dropping an impressive 6,6% amid “expectations of lower demand as temperatures rise later this week, together with stable thermal supply and higher renewable generation in France,” as stated by Reuters.

 

As if there weren’t enough reasons to push down carbon prices, a market analyst quoted by Carbon Pulse predicted that the price could be stuck near its current depressed level as “emissions in 2023 are likely to have fallen by around 23% in the power sector, and by around 5-6% in the industry sector.”