The European carbon market fell along with gas yesterday, maintaining a downtrend that started on Tuesday. EUAs closed at €78.05, marking a 2.79% daily loss, the same decline as in the previous session. This brings prices back to levels last seen a month ago.

During yesterday’s session, gas prices saw a significant drop, with TTF front-month contracts falling by 7.69%. Market participants pointed to the discussions among EU nations on increasing flexibility for storage targets as the main driver behind this sharp correction.

According to Reuters, quoting sources close to the talks, Germany, which has the highest gas storage capacity in Europe, “raised concerns the EU targets send a signal to the market that European buyers are obliged to buy, driving up prices.” Other countries, such as France and the Netherlands raised the same concerns. 

Colder weather, lower wind output and the loss of Russian gas supplies through Ukraine have been drawing down inventories. The storage sites are 46,57% full as of 12 February 2025, the lowest level since 2022, according to data from Gas Infrastructure Europe. As a result, increased gas demand for summer refilling pushed prices to a two year high on Tuesday. 

At the same time, weather provided a much needed helping hand. Recent forecasts “now agree that milder and windier conditions are on the way, likely arriving by mid-next week” writes Energi Danmark in a note this morning.