Last month was highly volatile for the European carbon market. In the initial days of February, the EUAs recorded prices that remained fairly constant, oscillating at around €81. However, in the second part of the month, prices started to decline, concluding the month at €71 and posting “their worst February in nine years” as stated by Allesandro Vitelli.

This downward trend was primarily due to a similar decline in the gas market. “The prices of both benchmark contracts are now finding near-perfect symmetry”, Gregory Idil, a senior carbon broker at BRS Shipbrokers, told Platts. TTF front month closed on Friday at €44.320/MWh, far below the highs seen on February 10 when it reached its highest value since early 2023, above €58/MWh. 

Gas prices managed to “post their biggest monthly loss in a year,” reports  Bloomberg. The decline was mainly driven by geopolitics such as growing optimism over a possible peace deal and high expectations of a partial resumption of Russian gas flows. 

However, both markets started this month with gains as concerns over rising geopolitical tensions sit in the front seat. It looks like market participants may have celebrated the peace plan too soon.  “A general bullish sentiment dominates on the market as an imminent peace in Ukraine has become more unlikely over the weekend, and we therefore also expect rising carbon prices,” according to consultancy Energy Danmark. 

As Trump positions himself as an unpredictable leader, it is hard to predict whether energy-related markets in Europe will go up or down in the short term. This morning’s rally in both gas and carbon prices is just a reminder that March is going to be another volatile month with all eyes on the new administration in the White House.