European carbon prices continued to edge up on Monday, following impressive gains from last week. The EUAs prices for Dec’24 contracts settled 2% higher at €61,43. It was the third consecutive day of gains for carbon, with four of the past five sessions now ending in the green.

Carbon prices have started to rally recently being driven mainly by the gas markets. “Benchmarks futures jumped as much as 7.7% on Monday, the biggest intraday jump since Jan 3” according to Bloomberg referring to TTF prices. By the end of the day, TTF Apr’24 settled at €28.822/MWh, their highest in more than five weeks.

An unplanned outage at Norway’s Aasta Hansteen field caused flow levels to Europe to drop by 7.5 mcm/day according to TSO Gassco. The outage which was previously announced would end today was extended until 25 March instead, according to Montel News.

Furthermore, colder-than-normal temperatures, which “are expected across parts of northern Europe next week,” as well as forecasts of lower wind generation would lead to increased gas for power demand adding further upward pressure on prices.

Aside from the upward trend in gas prices, carbon “also appears to be bullish itself after the recent price drop to almost 50 EUR/t has attracted new buyers”, according to a note released this morning by energy trader Energi Danmark.

Trading activity on the secondary market so far reached 1,594 billion EUAs, 14% higher compared to 1,40 billion EUAs in the period last year. The number is impressive because the demand from compliance buyers should be lower this year due to reduced emissions in 2023.

What makes it more impressive is the fact that trading activity should be reduced this time of the year considering the delay of the annual compliance deadline to 30 September, giving additional time for compliance buying. Furthermore, the distribution of free allocation, which normally leads to higher trading volumes, was also postponed from February to June.