European emission allowances (EUAs) have hardly moved in the last two weeks. The market has remained in a narrow trading range due to a lack of impetus to break through important technical levels. Institutional investors and investment funds have reduced their activities or limited themselves to short-term intraday transactions. The latest CoT (Commitments of Traders) report showed no significant changes in net positions - a sign of a wait-and-see attitude among market participants.

Short-term fundamentals weigh on EUAs

Current fundamentals are exerting noticeable downward pressure on the EUA market. Milder weather and increased electricity generation from renewable energies have reduced demand for emission allowances. In addition, economic uncertainties in connection with potential trade tariffs are weighing on the market environment. These factors are leading to a general reluctance to make long-term commitments.

Despite this rather pessimistic mood, the latest auctions have provided a glimmer of hope. All auctions were concluded at a price above the secondary market level - a clear indication of increased demand from the obligated companies. Apparently, these players are taking advantage of the current price level to buy at more favourable prices.

Outlook: Sideways movement likely

The following currently applies to both the EUA and UKA markets: without a clear fundamental impulse, no sustained movement is to be expected in the short term. A new trigger is needed - be it weather-related, political or economic - to free the markets from their current lethargy.