The European carbon market rebounded on Thursday from the previous sessions’ two-week low, in line with related gas. The EUA Dec’24 contract last traded at €66,04, up 3,6% from Wednesday’s settlement when prices reacted to the negative sentiment triggered by Donald Trump’s reelection.

As the craziness from Trump being back in office has cooled down, EUAs managed to fully recover to the level reached at the end of October. Among the reasons for the price growth were decreased wind power and colder weather perspective as temperatures were revised down for the second half of the month. 

As a result, the correlation between gas and carbon market is expected to remain positive and to continue to be a key price driver. According to LSEG carbon analyst Luyue Tan, “gas prices will most likely remain unstable until the end of the year, over the uncertainty of whether Russian gas will stop flowing through  Ukraine. This will significantly determine the behavior of carbon prices in the near term.” 

However, a possible deal with Azerbaijan to replace the loss of Russian pipeline flows through Ukraine or a rapid peace deal between Ukraine and Russia advanced by Trump and accepted by parties, would provide strong bearish signals to both markets.