EU carbon allowances break €14 price barrier
Analysts report bullish sentiment across the carbon market as hedging season gets under way
James Murray | BusinessGreen | 15 Apr 2010
The price of carbon in the EU emissions trading scheme hit a record high for the year yesterday, breaking through the €14 (£12.36) a tonne mark for the first time since the week before December's Copenhagen summit.
The failure of the summit to deliver an international deal led the price of carbon to fall back and prices have been locked in a narrow range of between €12 and €13.50 a tonne since the start of the year.
However, the price of EU allowances (EUAs) for delivery in December surged 40 cents yesterday morning to €14.10, setting a record for the year to date.
Traders said the price hike was driven by rising oil prices, which cleared $84 (£54) a barrel; new figures showing rising industrial output across the EU and the prospect of today's planned auction of four million EUAs by the Dutch government.
Speaking to BusinessGreen.com, Alessandro Vitelli, director of strategy and intelligence at analyst IDEAcarbon, said there was also an increasingly bullish sentiment across the market.
"We are shifting from the winter season when energy firms are focused on day-to-day operations, into the hedging season where they begin to establish hedging positions with forward purchasing of energy and EUAs," he said. "People are taking hedging positions for 2013… it's a breath of fresh air for the market after being locked in such a narrow price range for months."
He added that if the price consolidates above €14 over the next few days, it could rise further in the coming weeks, although he also predicted that it was likely to calm down again over the summer when traders go on holiday.
Confidence in the market has also been fuelled by increased levels of liquidity, with Vitelli reporting that the market is seeing about 18,000 lots a day traded currently, a significant increase on the daily trade of 12,000 lots that was recorded a year ago.
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