In yesterday’s session, the European carbon market resumed its upward trend, with the EUA Dec’26 contract closing at €89.10/t, its highest level in nine months, as the broader energy complex continued to strengthen.

Trading activity was particularly robust during yesterday’s session, with a total of 26.46 million allowances changing hands, significantly exceeding the monthly average of 21.1 million allowances. This represents an increase of approximately 25%, highlighting stronger market participation and heightened investor interest amid the ongoing rally in carbon prices. 

The upward momentum in the carbon market was accompanied by a broader rally across European energy markets, with both natural gas and coal prices reaching multi-year highs during yesterday’s session. The TTF front-month contract climbed above €100/MWh for the first time since December 2022, while German power prices continued to rise, extending the four-year highs recorded in the previous session.

The situation in the European gas market shows little sign of improvement, as significant LNG supply disruptions continue to weigh on the market, while several unplanned outages in Norway have added further pressure. 

Supply concerns are being compounded by forecasts of colder-than-average temperatures across Northwest Europe from next week, which are expected to boost heating demand and further tighten an already strained market, according to ING analysts.

On Thursday morning, energy prices retreated, with the European carbon market also experiencing a downward correction. Norwegian pipeline gas deliveries have stabilized, easing some supply concerns, while hopes for renewed peace talks have helped alleviate fears of further Middle Eastern supply disruptions amid escalating regional tensions, according to Reuters.

Against this backdrop of persistent supply uncertainty and elevated energy prices, European Union energy ministers are set to meet in Luxembourg on Thursday to discuss mounting pressures on energy supplies and costs, as the war in Iran and the broader conflict in the Middle East continue to raise concerns ahead of the winter heating season.

Market participants will closely monitor developments in the gas market and the outcome of the meeting, as both could influence the near-term direction of European carbon prices.