European carbon prices started the week on a strong footing on Monday, carrying over upward momentum from Friday, when the market ended the week up 1.41%, marking its highest weekly gain in a month.

The EUA Dec’26 contract reached €90 in early Monday trading and later moved back above the level following the auction close, marking an intraday high last seen on 22 August 2023. The move was largely supported by firm gas prices, with the TTF front-month climbing to its highest intraday level since late November last year.

In the near term, freezing temperatures are set to dominate much of Europe, with milder conditions expected after January 15. However, Trading Economics noted that while forecasts show temperatures remaining milder than normal over the next 10 days, models point to a renewed cold spell toward the end of January, adding potential upside risk to both gas and carbon prices.

Furthermore, geopolitical risks are lending bullish support to European gas prices, driven by concerns over potential disruptions to global LNG supply amid escalating protests in Iran. Around 20% of global oil and LNG shipments transit the Strait of Hormuz, a critical artery for global energy flows.

Low gas inventories are also supporting prices. As of 10 January, EU gas storage facilities were filled to 54.88% of capacity, according to data from Gas Infrastructure Europe, well below levels seen at the same time in 2025 (66.90%) and 2024 (81.64%).

We expect the carbon market to remain supported, as price direction has once again begun to track gas price movements, which continue to be shaped by weather conditions and broader macroeconomic indicators.