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Louis Redshaw remains bullish about the EUA price, despite last week's 9% rise and the sharp increase in auction volume this week.

This week's auction volume is the largest yet seen in 2019, but technical analysts continue to paint a bullish picture of the EUA market, says Louis Redshaw.

The bulls seem to have the upper hand in the market for EU Allowances at present, says Louis Redshaw.

EUAs came through a full auction week unscathed thanks to a rally on Friday that put EUAs into positive territory for the week, closing up 7c at €24.57.

Despite just four auctions last week, EU allowances (EUAs) ended the week down 62c (-2.4%) at €24.98. The EUA price bounced around between €25 and €26 for most of the week, with moves below €25 finding support in the form of pent-up compliance buying and moves above €26 exhausting industrial and utility buying and finding speculative sellers.

In last week's update we said that there were few fundamental reasons for EUAs to test the year's highs, but nonetheless they gave it a good try!

There appears to be little compelling reason for the EUA price to advance materially this week, says Louis Redshaw.

The end of compliance buying this week should help offset the impact of lower auction volumes, says Louis Redshaw.

There were small gains for carbon last week, continuing the recent bull run, albeit only just. The week closed up 31c at €26.89 having been in 'holiday mode' for much of the week. We went into the week with a bullish outlook based on the low auction supply but expected some risk-off trading by long speculators as we approached the Easter weekend, and so it transpired. There were three days of gains followed by a decline on the fourth day with traded volumes tailing off as the week progressed.

It is difficult not to be bullish this week, after another strong rise in the EU Allowance price, but volatility is a certainty, says Louis Redshaw.