The European carbon market started the week on a bullish note, with the December 2026 EUA contract closing at €88.19, its highest level in two weeks. The contract gained nearly €2 on the day, marking its largest daily increase in more than six weeks.

Trading activity was stronger than usual, with more than 25 million EUAs changing hands, compared with this month’s daily average of 21.75 million EUAs. This represents an increase of approximately 15% above the monthly average, suggesting heightened market participation and stronger investor interest.

Carbon prices tracked sharp gains in the gas market, where the TTF front-month contract has risen around 14% over the past four sessions, reaching its highest level in four years. Rising gas prices can encourage a shift towards more carbon-intensive coal-fired power generation, potentially boosting demand for EUAs.

“In addition to the Middle East uncertainty and the low gas storages, the weather forecasts had also turned colder and calmer over the weekend, offering further bullish support to a market which is already under pressure,” according to Mind Energy.

Both markets showed signs of stabilisation on Tuesday morning, offering some respite after the recent volatility. Updated weather forecasts helped ease demand concerns, with Natural Gas Intelligence reporting that warmer conditions were expected across northern Europe, while a brief cold spell in Asia was set to give way to milder temperatures in early November.

Despite Tuesday’s calmer trading, the approaching winter season could sustain upward pressure on carbon prices, particularly as the gas market remains tight and vulnerable to further disruptions. Meanwhile, ongoing discussions over the EU ETS review, coupled with persistently high energy costs, could fuel political pressure for measures to ease the burden on consumers and industry, adding uncertainty to the carbon market outlook.