European carbon prices climbed to their strongest level since July 2023 during Monday’s trading session, with the EUA December 2026 contract settling at €90.10 after a 0.6% daily gain. The market has now extended its rally to a fifth consecutive session.

The increase in European gas prices was more pronounced, with the TTF front-month contract ending the session 6.6% higher at its strongest settlement in nearly two months, amid low temperatures and geopolitical uncertainties.

Colder weather across much of Europe has lifted heating demand, while in China—another major LNG consumer—weather forecasts are predicting temperatures about 6°C below average in parts of the country this week, a development expected to lead to higher LNG imports, according to a report from Bloomberg.

Heightened geopolitical risks have further supported gas prices, in turn providing additional support to carbon prices. “The unrest in Iran is a concern for gas markets. First, there are potential risks to LNG flows from the Persian Gulf. Second, there is the potential for disruptions to Iranian gas flows to Turkey,” ING analysts said.

On Tuesday morning, upward momentum in the European carbon market continued, with EUA Dec’26 briefly trading above €91, while TTF gas prices rallied for a third consecutive day. Still, the auction this afternoon cleared below the secondary market, with a cover ratio of 1.57, suggesting reduced buying interest compared with the previous auction.

While EUAs are heading for a sixth straight daily gain, analysts at Mind Energy cautioned this morning that the market is nearing technically overbought conditions, raising the risk of a short-term correction.