The European carbon market got off to a weak start in September, with prices briefly falling below €82 during the morning session as the sharp rise in energy costs fuelled broader concerns over the European economic outlook.
August has traditionally been a strong month for the European carbon market, and this year was no exception, with EUAs once again delivering a positive monthly performance. The move fits a well-established seasonal pattern: since 2008, carbon prices have risen in August in all but two years, 2019 and 2023.
After four consecutive sessions of gains, carbon allowances lost momentum during Wednesday’s trading session, as buying interest gradually faded and proved insufficient to sustain the recent upward move or push prices decisively above the key €85 level.
The latest Commitment of Traders (CoT) report from ICE, released on Wednesday morning, shows that investment funds reduced their net long positions—the difference between long and short holdings—for a second consecutive week.
On a day marked by sharp gains across the European natural gas market, the European carbon market also moved higher. EU carbon allowances traded as high as €84.43 during Monday’s session before easing slightly to close at €83.80, marking their highest closing level in a month and reflecting broader strength across European energy markets.
The European carbon market remained notably subdued last week, showing limited reaction to sharp moves across the broader energy complex, even as European gas prices surged to their highest levels since March.
A recent ifo Business Survey of 830 German manufacturing firms examined the carbon price levels needed to trigger investment in green projects and how uncertainty over future carbon prices affects firms’ investment decisions.
Yesterday, the European carbon market gave back Tuesday’s gains, with the benchmark Dec-26 contract settling €0.60 lower at €81.71. The move leaves EUAs trading broadly around the €82/t level, where prices have remained largely range-bound over the past month.
The latest Commitment of Traders (CoT) report from ICE, released on Wednesday morning, shows that investment funds reduced their net long positions—the difference between long and short positions—to their lowest level in almost four months.
The softer tone that has recently emerged across the market persisted during Monday’s trading, with EUA prices moving lower for a second consecutive session. The latest decline pushed the settlement to its lowest level in nearly two weeks, highlighting the continued lack of buying conviction.