- December 24 EUAs gained c.18% last week; more importantly, EUA prices have jumped nearly 14% since Wednesday's close, in a move that mirrors developments in power, natural gas, and the broader energy complex.
- The market was constructive and supported by improved economic indicators. Concerns about geopolitics, especially in the Middle East and Ukraine, added to this. Breaching technical levels created a squeeze fuelled by the significant short positions held by investment funds. As of Friday last week (5 April), funds were 25 million tonnes short. It is a bit like Hotel California; it is easy to get in and a lovely place, but hard to get out, even more so in an environment like last week. We assume that the price jumps resulted from funds closing out positions coupled with the positioning of CTAs. We will know more next Wednesday when the COT numbers are published. The week began with a correction in EUA prices, which is possibly no surprise after last week’s significant move, and - for now - no further escalation in the Middle East. EUA Futures maturing in December 2024 currently trade at EUR70.50 per tonne.