This week opened with rising prices on the European carbon market. On Monday, the EUAs traded briefly at €65,49, a level last seen two months ago, before closing the session at €65 with a daily gain of €3,49, the second highest so far this year.

The increase in carbon prices was primarily attributed to rising gas markets where concerns are growing amid higher geopolitical tensions. As a result, TTF front-month prices added another 2,57% on Monday, following a 5,2% rise recorded in Friday’s trading.

Over the past few days, Russia has launched “its largest attack since the beginning of the war” on Ukraine’s power infrastructure, as stated by Montel News. The intensive attacks from Friday continued over the weekend, targeting, among others, an underground gas storage site.

Furthermore, the latest weather forecast indicates a “slightly colder start to April to be expected in the first week, followed by a return to seasonal normal for the remainder of the month,” as stated by consultancy firm Auxilione.

Apart from the bullish signals from the fuels, the carbon market would face a reduced auction supply over the next week due to the Easter Holiday. There won’t be any sales on Good Friday and on Easter Monday and no auction on behalf of Poland next Wednesday.

From our point of view, reduced trading activity, which is expected over the next week with many market players on holiday, can further amplify price swings due to speculators seeking short-term gains.