LONDON - European Union carbon emissions futures rose on Friday, as financial players who had sold permits short bought them back and as technical levels pointed toward consolidation, traders said.
The benchmark contract for EU Allowances was up 18 cents or 1.41 percent at 12.91 euros ($18.49) a tonne at 1519 GMT, with very heavy volume at 9,305 lots. EUAs hit an intra-day high of 13.24 euros.
The year is finally getting going. Many people haven't been involved before now with the auctions, snow and a European holiday.
The benchmark EUA contract's 100-day moving average broke below the 200-day trend line for the first time since August, indicating medium-term momentum has stalled compared to the rising long-term trend.
The benchmark certified emissions reduction (CER) contract's 50-day moving average is also poised to slip below the 200-day trend line early next week.
EUAs have been largely bearish this week due to three separate permit auctions. Prices started to recover after a UK permit auction on Thursday, which surprised some players.
Traders said, however, technical levels pointed toward a gradual rebound.
Utilities, who have typically hedged forward power sales, have quite long EUA positions, meaning they have surplus EUAs to their requirements.
However, the increase in open interest and selling ahead of the UK auction suggests financial players were short of permits and took advantage of low prices to buy back, creating a short squeeze.
European carbon permit prices will rise by some 10 percent to average 14 euros a tonne in 2010 as companies begin in the second half to hedge a permit shortfall set to arise in 2013, Barclays Capital said on Thursday.
German Calendar 2011 baseload power on the EEX fell 0.57 percent to 51.90 euros per megawatt hour.
UK natural gas prompt prices dropped 10.71 percent to 37.50 pence per therm.
The benchmark CER contract was up 17 cents or 1.53 percent to 11.28 euros a tonne.
The United Nations Environment Programme cut its CER supply forecast to 2012 to 1.092 billion tonnes from 1.149 billion on Friday.
(Reporting by Nina Chestney; Additional reporting by Michael Szabo; Editing by Keiron Henderson)