Bullish momentum continued to dominate the European carbon market, with EUA prices tracking sharp gains across the energy complex, particularly natural gas, amid what Carbon Pulse described as “aggressive buying.”

Dec-26 EUAs climbed to an intraday high of €88.82, revisiting levels last seen in mid-January, before settling at €88.34, up €1.40 on the session. The advance marked a fifth consecutive day of gains, lifting the benchmark contract by 4% month-to-date.

The rally was largely underpinned by continued strength in European gas markets, with front-month TTF surging 15% so far this month as fading hopes of a normalization in Middle Eastern gas supplies ahead of winter reinforced bullish sentiment across the energy complex.

Weather-related fundamentals added further upside pressure, with the latest forecasts pointing to below-average temperatures in Germany, Europe’s largest economy, from the middle of next week, alongside weaker wind generation across the continent. The combination could lift heating demand and increase reliance on conventional thermal power generation, providing additional support to gas prices and potentially boosting demand for EU carbon allowances.

However, the bullish momentum in carbon showed signs of fading in early trading this morning, with EUAs diverging from the gas market despite renewed strength in TTF. Carbon prices edged lower as traders encountered selling pressure at recent highs, “as the market faces technical resistance at this level”, according to Mind Energy.