The European carbon market continues its downward trend, with EUAs dropping briefly to €71.15 during trading on Tuesday, a level last seen in December. The market eventually closed at €71.75, reflecting a 2.59% daily decline.

The carbon’s development was once again closely tied to the natural gas market with  the TTF front month dropping 6,05% amid rumors of a peace deal and discussions on loosening targets for gas storage. 

Gas market took comfort from recent signs that a three-year long war in Ukraine could end soon. “Rumours of the US-Ukraine ‘minerals deal’ of recent days appear to be more concrete with the Ukrainian now side confirming a deal has been agreed and President Zelenskyy due to meet President Trump in Washington later this week,” writes Auxiilione this morning. 

Another factor contributing to the downward pressure was the news in the media that German utilities are urging authorities for more flexible targets to refill the gas storage ahead of next winter. An official from Uniper said during a press conference yesterday, that BDEW, the largest energy industry association, is pushing for “reducing the storage target from 90% to 80%.”

“EU gas storage is a little over 40% full, down from 64% at the same point last year and below the five-year average of 51%,” warns ING Bank this morning. However, weather reports suggest milder temperatures across most of Europe over the next couple of weeks, with a high likelihood that the heating season, which officially began on October 29, 2024, could end earlier, a bearish signal for the gas and carbon market.