Early trading on Monday is seeing modest losses for EUAs compared to the close on Friday, with a gap lower at the open. If prices drop further through technical support at €76.85, we might end up with an evening star candlestick formation which would be a solid signal of a reversal and return to lower prices. Other indicators however – MACD, RSI – still look positive. From a fundamental perspective, things are looking more bullish. Further trilogue negotiations on REPowerEU and Fit for 55 are scheduled for Tuesday, and the weather is forecast to get colder from 5 December, which could prompt some additional power demand. French nuclear remains well below capacity, adding to EUA demand. A question for the market will be whether colder weather also means more withdrawals from natural gas storage that could culminate with industrial shut downs in the mid-term – that and risk of recession might give traders pause to think, and limit gains for EUAs. Finally, EUA options expire on 14/12/2022, which could see the market drawn to the €75 or €80 levels, at which there is considerable open interest. Therefore we take a cautiously bullish view.

  • 9.4 million EUAs will be sold at auction this week
  • Market moving events:
    • Weather forecast to get colder from 5 December – short term bullish, mid-term bearish? Even during the recent cold spell, energy demand remained low. A longer cold spell which is forecast could test Europeans’ resilience in keeping the heating turned down, and increased power demand could generate a short-term bullish reaction for EUAs. Mid-term, though the EU seems to have successfully soothed the gas markets and has made margining for power sales hedges easier – giving some stability to energy markets and support for EUA prices to rise.
    • Options expiry 14/12/2022: we’ve seen EUAs be drawn towards key levels at which traders are holding call options – we could see the same happen again. About 10,000 call options (10,000 x 1000 EUA) are held at an €80 strike price, so we could see the market drawn there over coming weeks. Bullish
    • REPowerEU Trilogue Tuesday 29/11/2022  the European Council’s position is for €20bn raised by end-2026, using 75% innovation fund EUAs and 25% frontloaded auctions. The Parliament’s position is that auctions should be front-loaded and those EUAs sold for a year from 2025-2026. Given that the Parliament’s position is relatively more bearish, a move in negotiations towards faster sales could generate a bearish price reaction, otherwise we probably won’t see any major bullish price action
    • ETS market reform trilogue Tuesday 29/11 likely to generate either neutral or bullish price signal: if negotiations tend towards the European Council’s position, which is more ambitious, this could send a bullish price signal for EUAs; if the discussion is pulled towards the Council or Commission’s positions then the market would likely react neutrally. The state of negotiations as yet is unclear.
  • Fundamentals: 
    • Gas storage: 93.75%, down from 94.57% on 18 November.
    • Fuel switching: gas fired power remains less profitable than coal fired power. EUAs would need to reach approximately 345 Euros to allow for fuel switch from coal to gas. – bullish
    • No EUA auctions 19 December 2022 – 9 January 2023 – bullish
    • French nuclear struggles to come back online to full capacity – bullish for EUAs: a quarter of reactors were meant to come online again by mid-December, but EDF are saying that maintenance is running behind schedule. EDF looks set to generate at only only 41.7% of capacity today. – bullish
    • Investors: investment fund net positions decreased considerably last week, according to ICE data – from 9.1 million EUAs on 11 November to 3.7 on 18 November.
  • Other: 
    • Maritime sector inclusion: a leak from the European institutions suggests a phase in for the maritime sector to 100% of emissions between EU ports 2024-26. More discussions on this may be held tomorrow, and could generate a neutral to slightly bullish price impact.
  • Technicals: EUAs look trapped between technical levels after failing to hold onto Friday’s gains – which had tested key resistance at €78.50. We saw EUAs test support at €76.85 on Monday morning, and also attempt to move higher without success – a break of either €76.85 to the downside or €78.50 to the upside should set the direction for the market. Current trading between the 200-day moving average at €79.51 and 100 day moving average at €76.85 could keep the market in consolidation move as we await further developments. MACD is positive and RSI just above 50, suggesting positive momentum does remain.

Key Technical Levels:

R3: 82.50

R2: 79.50

R1: 78.50

CP: 77.10

S1: 76.85

S2: 75.50

S3: 73.83

(***CP = Current Price)


Outlook: Bullish to neutral

  • Indicative EUA Price: €77.10
  • YTD Average EUA Price: €80.66
  • MTD average EUA Price: €76.30



1 – Dec22 EUA price chart 2 – Clean Generation Spreads – ICIS: energy sector EUA demand remains strong as coal and lignite remain in the drivers seat


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