EU carbon at 2-week high supported by oil, German power

LONDON (Reuters) - European carbon emissions futures rose to a two-week high on Monday, supported by stronger German power and oil prices, traders said.

Smoke billows from a chimney of the Termika factory, which produces glass wool, in Skojfa Loka January 21, 2010. REUTERS/Srdjan Zivulovic

EU Allowances for December delivery rose 14 cents or 1.08 percent to 13.14 euros ($17.85) a tonne at 0801 GMT, having eased from an intra-day high of 13.25 euros.

EUAs last traded at those levels on February 17. Volume was light at 980 lots traded.

“It seems German power and oil are lending some support, along with the cold weather,” an emissions trader said.

German Calendar 2010 baseload power rose 1.20 euros or 2.57 percent to 47.90 euros per megawatt hour.

Oil rose more than 1 percent to top $80 a barrel amid threats by Iran that it could cut off energy supplies to Europe.

Traders warned that the market still needs some external stimulus to give it more direction as it still stuck in range-bound trade.

“The EU’s precarious economic position, with the 27-nation bloc skirting a double dip recession, continues to weigh on sentiment and could only change after the release of 2009 emissions in April,” said Jean-Francois Cauvet at COER2 Commodities.

In April, data will be released detailing the bloc’s emissions in 2009.

Meanwhile, interest is building on the 2012 and 2013 contracts, as the spread has widened, traders said.

Open interest on the Dec-12 contract reached almost 140 million on the European Climate Exchange on Friday, just below the Dec-10 volume, showing that investors are bullish in the long term.

Certified emissions reductions <CEREZ0 were slow to trade.