This week the bull run might run out of steam as the short-covering buying interest that had driven prices above €70 dissipates, leaving EUAs to consolidate between €75 and €80. Two main price drivers could exert an influence on the trading direction of EUAs this week: 1) weather forecasts for November, with colder weather sending a bearish signal due to its mid-term implications for gas reserves and for industrial productivity, and 2) most likely bullish or neutral legislative developments on REPower EU and Fit for 55 planned for this week. EUAs should otherwise find support on heavy energy sector demand, recoveries to industrial productivity, good preparations for winter in terms of gas reserves and demand reductions, and an already exceptionally tight market. Inflation and weak economic figures however will keep mid-term bearish potential alive.

  • Legislative sessions scheduled for this week more likely to move prices higher than lower:
    • 9 November the European Parliament will vote on REPower EU, and
    • 10 November another Fit for 55 trilogue session between Parliament, Commission and Council is scheduled.
    • Next week, date TBC another trilogue session on CBAM is scheduled.
  • Of all of these sessions, Fit for 55 talks have most potential to move EUA prices. The market currently assumes the baseline Commission proposal will be what the final Fit for 55 package looks like. With no weaker proposals on the table, this probably means developments on Fit for 55 will present little downside risk. Movement towards the Parliament’s more ambitious positions, however, could prompt a bullish reaction for EUA prices.
  • Cooling weather to play into uncertain trading: colder temperatures are hitting much of Northern Europe this week. European gas reserves stand above 94% full. Typically gas storage meets 20-40% of winter demand – 40% in the case of a very mild winter. The potential disruption of high gas prices with low storage reserves in a few months time should limit potential upside for EUAs. Mild weather forecasts, on the other hand, would be supportive for EUAs as they’d keep gas storage intact and cut residential heating demand.
  • Short squeeze the temporary technical driver behind the price increase? The ICE Commitment of Traders data (see chart 2) released this week shows a reversal in net short positions held by investment funds – moving from a net short position of 7 million EUAs to net long at 5.64 million EUAs in a week. Those buyers will have been forced to market to close out their short positions when EUA prices moved through technical resistance at €69.50 and then €72.50 euros – with that buying interest driving EUAs even higher. The absence of that demand plays into neutral expectations for EUA prices this week.
  • Market fundamentals remain strong: it remains far more expensive to generate electricity using gas when compared to either coal or lignite. That locks in heavily polluting fuels and so will keep EUA demand strong. See chart 3. Industrial production is recovering, though not back to previous levels, as gas prices fall.
  • Technicals: the 200-day MA is lying at 81.73 just above the YTD-average. The 100-day MA is at 80.55, while the 44-day MA at 78.11. The cross of 44 through the 200 happened on the 9th of September and since then we have experienced a price consolidation and a breakout on the upside.
  • The 44-day RSI is just above 50, the momentum still is at positive territories, while the break price point towards the downside remains at 74.50. Taking all these into account, the bulls are still in the game with the MACD signaling a buy.

  • A break above 79.23, will support the bull run view, while any break below 74.50, might take prices down towards the 73.83 and 70 price level.

Key Technical Levels:


R1: 82.50

R2: 87.90

R3: 90 (psychological level)


S1: 75.80

S2: 74.50 (Back to Bearish momentum – point break)

S3: 73.83 (Strong Support)

S4: 70 (Psychological level)



Outlook: neutral

  • Indicative EUA Price: €77.04
  • YTD Average EUA Price: €81.05
  • MTD average EUA Price: €77.30



1 – Dec22 EUA price chart 2 – Investment Fund EUA holdings


3 – Clean Generation Spreads

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