European carbon prices have traded largely flat since Wednesday, with the market showing little reaction to the return of daily EUA auctions and forecasts revised toward warmer conditions, factors that would normally exert downward pressure on prices.

The EUA Dec’26 contract remained above the €88 level for a third consecutive session, closing on Thursday at €88.19 after posting a modest daily gain of €0.06, building on the €0.03 increase recorded in the previous session.

Meanwhile, gas prices for the TTF front month declined by 3,75% in Thursday’s session after updated forecasts for next week indicated “a shift towards a milder climatic pattern in the UK and southwestern Europe” as stated by LSEG’meteorologist Georg Muller, quoted by Reuters.

Furthermore, medium-term forecasts indicate that temperatures near or above seasonal averages are likely to prevail through the second half of January, easing gas demand and providing some relief during a period of stronger storage withdrawals.

“Over the last two weeks, withdrawals from underground gas storage facilities in the EU have averaged more than 190 mcm/d higher than the 5-year average,” according to Timera Energy. Data from Gas Infrastructure Europe shows that as of January 8, inventories were 57,18% full compared to 68,17% a year before. 

However, the relationship between gas and carbon has weakened, with trading data showing a limited impact on recent price movements. As the gas market looks for clearer signals from weather forecasts, the carbon market continues to trade in a largely directionless manner.

On Friday morning, the carbon market initially moved higher following the first German auction of the year, which cleared at a premium to prevailing spot prices and recorded an impressive cover ratio of 2.73, signalling strong buying interest. 

However, the market was unable to sustain the gains, with prices subsequently easing back toward levels seen prior to the auction, as participants reverted to a wait-and-see stance in the absence of clear directional catalysts.