During the first week of October, ending on the 4th, the market declined again after a modest rebound in the last week of September. On a weekly basis, the EUA DEC24 dropped by 6.45%, a significant decrease not seen since last April. This brought us to the lowest prices since April, with the EUA DEC24 reaching €61.41/tonne during Friday’s session a critical support level that helped prevent a potential collapse to the year’s lows (around the €50 area).
The price of allowances was strongly bearish from the start of the week, extending losses through Tuesday and Wednesday, before losing downward momentum and closing Friday, October 4th, at this key support level. The market traded below the lower Bollinger band but did not enter oversold territory, indicating potential room for further declines. The situation in the Middle East added pressure to Europe’s macroeconomic outlook, making the first technical resistances at €62.34/tonne and €66.63/tonne seem distant.
In the following week, from October 7th to the 11th, the market turned bullish after hitting its lowest point since April. From €60.06/tonne on Monday, October 7th, the DEC24 EUA made a strong upward move starting Wednesday, gaining 5% in intraday trading on Thursday alone. The overall weekly increase was 4.14% compared to Friday, October 4th. Monday, October 7th, saw very high trading volumes, with 61 million allowances traded on the front-year.
Given that the market bounced three consecutive times above the €60/tonne threshold, we could confidently confirm support at this level. Several resistances were broken in the following days, including the 20-day moving average crossed on Thursday, with the 200-day moving average at €66.28/tonne next in line for testing. The market continued to be deeply influenced by TTF movements, which lacked clear direction and consistency.
In the two following weeks, from October 14th to the 25th, we saw a sharp decrease in allowance prices, reaching the important Fibonacci level of €61.40/tonne on October 21st and 22nd. This was followed by a steady recovery, bringing prices back up to highs of €67.57/tonne on October 24th. Extreme volatility during this period stemmed from rising concerns about the Middle Eastern situation and a spike in TTF prices.
During the last week of the month, the ICE market closed with a decline in DEC24 EUA compared to Friday, October 25th; on a weekly basis, the permit price dropped by 4.63%. The most significant losses occurred toward the end of the week, following sessions on Monday, October 28th, and Tuesday, October 29th, which marked a halt in the price rally. This was due to the easing of tensions related to Israel’s response to the Iranian attack, which spared the country’s energy infrastructure. Nonetheless, the market remained heavily influenced by macroeconomic and political developments, as well as heightened interest from short-term speculators seeking to capitalize on these price fluctuations.
Weekly lows were recorded at the end of this period, with €63.22/tonne on Friday, November 1st a day when the market remained open despite being a holiday in several EU countries. The first resistance was around €66/tonne, at the 100-day moving average level, which limited gains since last Thursday. Meanwhile, a support area remained around the late October lows, near €61.40/tonne. In the coming days, we may see possible sideways movements due to the U.S. election outcome; a Trump victory might not trigger a price collapse of the same scale as in 2016 but could still influence market direction.
With his commodity trading experience, specializing in the energy sector, and extensive knowledge of European exchange platforms and Over-The-Counter markets, he brings his advanced analytical view on the EU ETS carbon market in a monthly short blog, “Let’s Talk Carbon”.