The European carbon price traded comfortably above €80 on Friday, before settling at €79.26 by the close, a level last seen in May 2024. Carbon also managed to extend its rally for a seventh consecutive session, posting an impressive 5,6% weekly gain.

The current uptrend on the carbon market appears to be the result of speculative buying, with EUAs dragging gas prices, rather than vice versa. “Today it is carbon in the driving seat of TTF gas,” wrote Yan Qin, carbon analyst at ClearBlue Markets, on Friday.

EUA Dec’25 contract started on a strong note, gaining more than €10 since it took over as the benchmark, rising in 9 out of 12 sessions this year.  Meanwhile, speculative investors have boosted their bets on rising carbon significantly, from 0,9 million allowances in the week ending on 20 December to 29 million allowances in the week ending on 13 ianuarie, a level which is the highest since August 2022. 

The funds’ trading behaviour over the past month suggest a preference for buying over selling and could explain the recent upward move. “The question is when the speculative investors will start closing their positions to secure profit, something which would lead to falling prices,” warns trader Energi Danmark in a note this morning.

Analysts note a potential bearish development for both carbon and gas as the latest weather forecast indicates warmer days  in Central Europe by the end of this week, potentially continuing into early February.