Prices continued to surge in the European carbon market last week, tracking sharp gains in natural gas prices. During Friday’s trading session, the EUA Dec’26 contract briefly climbed above €90 for the first time since January but faced technical resistance at that level, failing to sustain its intraday gains.

Prices subsequently retreated, closing nearly €1 below the session high and broadly unchanged from Thursday’s close. Despite more subdued trading towards the end of the week, the contract still posted a weekly gain of 3.4%, supported by strong advances earlier in the trading period.

On a monthly basis, the contract recorded a 4.8% increase in October, marking the second-largest monthly gain of the year after May’s sharp rally. As noted by Carbon Pulse, prices are now trading “above the level at which the market ended 2025.”

The main driver behind the upward trend in the European carbon market was the sharp rally in natural gas prices, with the front-month TTF contract surging 11% over the course of last week. Gas prices climbed above €100 for the first time since 2002 and remained comfortably above that level at Friday’s close.

The rally in natural gas prices was fuelled by mounting supply concerns ahead of the heating season, as several unplanned outages in Norway heightened fears of potential disruptions. Meanwhile, weather forecasts pointing to colder temperatures across Northwest Europe added further upward pressure on prices.

On Monday morning, early signs pointed to declining gas prices after the weekend passed without either new strikes or a breakthrough in negotiations over the US–Iran conflict, suggesting that no news may be good news for the market. Media reports indicated that talks aimed at ending the war had made some progress over the weekend, although it remains to be seen whether they will lead to a concrete agreement.

Another key focus this week will be the outcome of the US elections. As reported by Reuters, “Trump has said the United States would not launch ⁠new attacks ​on Iran before the vote, though he has not ruled out further military action.”

Furthermore, weather forecasts for Northwest Europe indicate colder-than-usual conditions this week, potentially leading to significant withdrawals from gas storage facilities, according to ING analysts. The heating season is now underway, with EU gas storage levels having peaked at 74.96% on Wednesday before gradually declining in the following days.