The European carbon market started the week on a bearish note, with the EUA Dec ’25 contract falling by nearly €2 on Monday to settle at €68.97 — its lowest closing level since early May. Carbon prices tracked the downward movement in gas markets, as the TTF front-month contract ended the session 2.25% lower compared to Friday’s close.

Gas prices extended their decline for a seventh consecutive session on Monday, as geopolitical concerns in the Middle East continued to ease. “The focus has therefore shifted back to weather developments, with increased gas demand expected due to warmer weather in Europe,” an analyst told Reuters.

The decline in European gas prices also reflects weaker LNG demand from China. According to Bloomberg, citing Kpler data, Chinese LNG imports in June were 12% lower year-on-year. Import volumes have now declined for eight consecutive months, driven by the country’s ongoing economic slowdown.

In addition, gas output from Norway has stabilized, with planned maintenance outages not expected until late August,  adding to the downward pressure on the market. “However, export volumes remain below the levels seen during the same period last year,” according to AInvest.

Nevertheless, both markets remain vulnerable to disruption from unplanned supply outages in Norway or extreme weather events this summer. During heatwaves, power demand typically surges, especially for air conditioning, while nuclear reactors often reduce output, increasing reliance on fossil fuel generation and puting bullish pressure on gas and carbon prices.