EU carbon prices poised for upside breakout

European Union carbon futures are poised for another bullish run which could push prices up to 18.60 euros ($22.67) a tonne by the end of June, a technical expert said on Friday.
A bullish technical formation on the Dec-10 EU Allowance futures show that prices have now consolidated in a range between 15 and 16 euros, and an upside breakout may be imminent.
"It's a bullish symmetrical wedge, which is identified by the direction that price enters to commence its construction," said Brett Genus of brokers Evolution Markets. "The breakout is typically a quick successive move, but when we get it we will look for a substantial pick-up in volume and open interest." 9Source: Thomson Reuters Carbon Market Weekly)

The futures were traded at 15.29 euros a tonne on Friday afternoon, up 3 cents on the day and 18 cents on the week.
Genus said he expects the benchmark EUA futures to re-test an 18-month high hit on May 4 before the end of the month, with prices rising as high as 18.60 euros.
"There's a good chance the Dec-10s will try to take out the old high of 16.73 euros. There is foundation from a fundamental perspective for another bullish run and the Elliot Wave theory supports this notion, showing a target of 18.60 euros by the end of June," he said.
Genus's target represents a 21.6 percent premium on current prices.
Genus pointed to Deutsche Bank estimates that benchmark EUA prices would climb to 18-20 euros a tonne by the end of the year.

UAs are up 22.5 percent or around 2.80 euros so far this year, mainly due to a surge in April that saw prices jump 24 percent. Traders said that rally was fuelled by a mix of future power sale hedging by utilities and speculative buying by financials.
EUA prices have receded from recent highs by around 8 percent, mainly due to weaker crude oil and German power prices.
At $73.00 a barrel, U.S. crude oil futures are down over $14 or 16 percent from a 19-month high of $87.15 on May 3.
German Calendar 2011 baseload power prices are nearly 4 percent below a 16-month high of 55.45 euros a tonne, also hit in early May.
The current 15-16 euro EUA price range also constitutes a resistance level at which the contract bounced off during the second and third quarters of 2009.