The European carbon market fell along with gas on Thursday, dropping at one time to as low as €65,54 and closing the session at €66,10, a level last seen a month ago. Also notable is the daily loss of €2,53, the largest since April.

Once again, carbon prices were being driven by the gas market’s evolution. TTF front month dropped 4,23% in yesterday’s trading amid recent weather forecasts suggesting milder weather in north-west Europe from 15 December up until Christmas.

Besides weather conditions, “there appears to be a general feeling on the gas market that the increases during November were a bit exaggerated” wrote Energy Danmark in a note this morning, noticing that gas prices “have been falling rather noticeably over the last couple of weeks.”

However, the gas market balance “remains delicate, with the expiration of the transit deal between Ukraine and Russia by the year end,” warns ANZ Research analysts quoted by the Wall Street Journal. 

There is a general agreement on the carbon market that EUAs will continue to track the movements on the gas market, in the short term. However, the annual pause in auctions over the new year period, starting from 17 December up until 7 January, normally adds bullish pressure on carbon prices, regardless of the weather conditions during that interval.