An otherwise bearish period on the European carbon market was interrupted in Thursday’s session, where prices instead started to increase in the afternoon, decoupling briefly from both the gas and coal markets.

The EUAs closed the session with a daily gain of 1,8%, despite dropping to €71,55 in the morning session, the lowest level so far this year. Meanwhile, the European gas market continued to extend the downtrend, with coal following the suit.

Analysts pointed a finger at new margin requirements on the Intercontinental Exchange (Ice) exchange, effective from 9 January. Ice raised its margin requirements for TTF gas while lowering for EUA contracts. “Some participants offloaded gas positions, and some increased carbon buying,” noticed Yan Qin, principal analyst at ClearBlue Markets.

Exchanges raise margin requirements when the price moves become too volatile in order to account for the increased risk. As a result, traders could start to liquidate part of the short positions in order to avoid paying higher margins. Conversely, less volatile prices could lead to lower margin requirements.

Friday morning, the EUAs are again closely linked to lower gas amid milder weather in Central Europe for next week. Furthermore, “there appears to be a sentiment on the gas market that the recent price jump was exaggerated and that a correction is necessary,” as stated by Energi Danmark in a note this morning.