EU Allowances Recover After Hitting Yearly Lows

Dec23 EUA settles at EUR 78.70, marking a 1.4% increase over five days. This article delves into the factors driving these movements and offers insights into future market trends.

The benchmark Dec23 EUA contract witnessed a notable fluctuation, settling at EUR 78.70 on Friday, marking a 1.4% increase over five days.

This article delves into the factors driving these movements and offers insights into future market trends.

Price Movements

The Dec23 benchmark contract experienced a significant dip on Monday, dropping to EUR 75.84, the most considerable decline in three weeks. This trend continued into Tuesday, with the contract closing at its lowest since November 22nd. A key factor in this decline, according to analysts, was increased selling in the US market.

However, the scenario began to shift midweek. The release of the Commitment of Traders (CoT) report, showing a record net short position by investment funds, spurred a modest rally. The market's reaction to this was a blend of short squeezes and cautious trading, leading to the first daily increase in four days.