"The increasing exposure of the European gas market to
spot gas prices is likely to be bearish for European carbon out
to 2015 or so," he said. Carbon for December 2013 fell 2.2
percent today to 16.77 euros a ton.
+------------------------------------------------------------------------------+
EU Carbon Permits Fall to Two-Month Low as U.K. Gas Prices Drop
2010-10-21 17:01:05.651 GMT
By Mathew Carr
Oct. 21 (Bloomberg) -- European Union carbon-dioxide
allowances declined to their lowest level in almost two months
as U.K. natural-gas prices dropped, potentially making the
cleaner-burning fuel more profitable for power utilities.
EU permits for December fell 30 cents, or 2 percent, to
14.85 euros ($20.75) a metric ton, which would be the lowest
close since Aug. 23 on London's European Climate Exchange.
U.K. gas for the six months through September fell 1
percent to 46.85 pence a therm on the ICE Futures Europe
exchange. That's equal to $7.38 per million British thermal
units and would be the lowest close for the front-summer
contract for a month. A therm is 100,000 Btus.
Lower gas prices may prompt some power generators to switch
to the fuel, which requires about half as many carbon permits to
burn as coal. The EU carbon program is the world's biggest
emissions market by trading volume.
Barclays Plc said it recommends selling the front-summer
gas contract because its price is too high.
"Our only new position this month is a short in the U.K.
natural gas summer strip for 2011," Barclays Capital analysts
including Suki Cooper said in a research note dated today.
Forward prices look "substantially overvalued," according to
the bank, which pointed to the potential growth in liquefied
natural gas supplies to Europe.
The carbon price, which punishes the burning of coal more
than of gas, will boost demand for the cleaner fuel even as it
delinks from oil prices because of the additional LNG supplies,
Trevor Sikorski, another Barclays Capital analyst in London,
said in a separate report.
"The increasing exposure of the European gas market to
spot gas prices is likely to be bearish for European carbon out
to 2015 or so," he said. Carbon for December 2013 fell 2.2
percent today to 16.77 euros a ton.
For Related News and Information:
Top Power Stories: PTOP <GO>
Emissions-trading stories: NI ENVMARKET BN <GO>
Today's top energy news: ETOP <GO>
European power-markets home page: EPWR <GO>
--Editors: John Buckley, Mike Anderson
To contact the reporter on this story:
Mathew Carr in London at +44-20-7073-3531 or
m.carr@bloomberg.net
To contact the editor responsible for this story:
Stephen Voss on +44-20-7073-3520 or sev@bloomberg.net
