The upward momentum from last week, which delivered a 4.2% weekly gain, carried into Monday on the European carbon market. EUAs climbed as high as €77.32 before settling with a 1.49% daily increase.

On the European gas markets, TTF front-month prices surged even more sharply, rising 3.43% amid supply concerns and unfavorable weather conditions. Last Friday, EU Energy Commissioner Dan Jorgensen reaffirmed the bloc’s stance on Russian energy, stating the EU remains committed to phasing it out “even if a peace deal with Ukraine is reached,” as quoted by Reuters.

In addition, the US Treasury Secretary told the media on Sunday that the country “is prepared to increase pressure on Russia, but we need our European partners to follow us.” In other words, any new sanctions on Putin are contingent on the EU halting purchases of Russian gas and oil.

“Traders are bracing for news on a European ban on Russian gas supplies,” according to ANZ analysts, explaining Monday’s surge in gas prices. Furthermore, colder weather and less windy conditions added to the bullish pressure.

According to AleaSoft Energy Forecasts, this week wind energy is expected to decrease “in the main European electricity markets” while “solar energy production will decrease in Germany and Italy.”

Going forward, the compliance deadline at the end of this month is expected to add some pressure on carbon prices. However, weather developments are playing a larger role in driving prices as we head into the heating season, often exerting more immediate influence than other factors.

On the bearish side, the latest data show a comfortable level of gas inventories. As of 7 September, EU storage deposits were nearly 80% full (86.46% for Romania), keeping the bloc on track to meet its winter targets and easing market concerns.