The European carbon market began last week on a strong bullish trajectory, with EUA Dec’26 contracts closing Monday at €77.17. Despite the positive start, carbon allowances struggled to sustain upward momentum throughout the week, gradually retreating as trading progressed. By Friday’s close, prices had settled at €75.60, leaving the market with a modest weekly gain of just 0.56%.

Trading activity weakened sharply toward the end of the week as several European markets saw reduced participation around the Ascension Day holiday on Thursday and the bridge holiday on Friday. Combined trading volumes for Thursday and Friday reached just 20.25 million allowances — a level more typically associated with a single normal trading day — underlining subdued liquidity conditions and cautious market positioning.

In contrast to the relatively subdued carbon market, energy markets experienced significantly stronger volatility. The TTF front-month gas contract extended its rally for a fifth consecutive session, climbing above €50/MWh for the first time in more than a month. The move was largely driven by growing geopolitical concerns after the China-US summit in Beijing failed to deliver meaningful progress toward easing tensions surrounding the conflict in the Middle East.

Analysts at ING warned that “the gas market is underpricing the scale of the supply impact from the Persian Gulf. Asian buyers will need to enter the spot market to replace disrupted contracted cargoes from the Persian Gulf, increasing competition between Asian and European buyers.”

While gas prices continued to rise on Monday morning, reaching a fresh monthly high in early trading, the carbon market remained largely consolidated around the €75 level, which many participants perceive as a fair valuation following remarks made by Ursula von der Leyen during the EU Council meeting in March.

According to analysts at BBVA, “Subdued volumes, reduced speculative short positioning, and a lack of meaningful fresh long participation all point to the same conclusion: conviction remains low. In the absence of a macro shock or a significant drop in equity prices, downside risks now appear more contained than earlier in the year.”