European carbon surges more than 7% on lower auction allowances


PARIS, April 20 (Reuters) - The benchmark European carbon contract jumped more than 7% on Wednesday after fewer allowances were auctioned this week and as easing gas prices incentivised buying up of permits.

The benchmark December 2022 contract CFI2Zc1 climbed to a seven-week high of 86.36 euros/tonne by 1219 GMT, up 7.6% from Tuesday's close and its highest price since the Russian invasion of Ukraine drove down permit trading to multi-month lows.

"With gas prices easing over the past few days, we are seeing carbon now breaking out of a neutral technical zone which was capped at 82 euros per tonne," Greenfact analyst Marcus Ferdinand said.

"This likely causes some market participants, who have been in a wait-and-see position following the rollercoaster ride as a result of the Russian invasion, to build up new positions," he said, adding fewer-than-usual permit auctions was bullish for carbon.

There was no auction of permits by the European Union on Monday due to the Easter holiday and no auction of Polish permits on Wednesday as these auctions are held fortnightly.

A total of about 7 million permits will be offered at auctions this week, down from around 10.8 million last week.

The carbon price increase could also be related to last-minute compliance buying since the deadline for reporting emissions for 2021 is coming up on April 30, Rystad Energy analyst Fabian Ronningen said.

Although Ferdinand said this was unlikely as market participants were mostly hedged for their 2021 emissions.

(Reporting by Forrest Crellin; Additional reporting by Susanna Twidale; Editing by Edmund Blair)


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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