Nena News

Carbon sinks further as energy weakness continues

 (Montel) European carbon fell for a seventh successive day on Thursday as energy prices came under renewed pressure.

The benchmark Dec-16 EUA futures contract dropped as much as 5.5% to EUR 4.62/t on Ice, a new 22-month low, and last traded at EUR 4.70/t.

Front-month Brent crude oil was 1.5% lower at USD 30.37/barrel, while German baseload power for 2017 declined 1.5% to EUR 20.83/MWh on EEX.

Carbon’s weakness continues to perplex analysts, who point out that prices have in the last six weeks have given up all the gains made over the period from early 2014 to the end of 2015.

“The CO2 market is not based on fundamental factors,” said Sigbjørn Seland, analyst at Nena. “The carbon price has halved in a short period of time, and nobody can rule out this happening again.”

Others were equally baffled by the 43% price fall in carbon since the beginning of the year. “I’m thinking we are at a huge crossroads,” Paolo Coghe, an analyst at Societe Generale in Paris, told Montel. “We’ve had backloading and the MSR, we’re discussing the post-2020 review, and still the market has fallen precipitously.”

“Does this market have any meaning? The proof will be if and when prices start to rebound. The question is where will it go next? Either it will have a V-shaped rebound, or it will struggle along and recover more slowly,” Coghe added.


Reporting by:
Gert Ove Mollestad
11:56, Thursday, 11 February 2016