Policy nervousness causes sell-off, volatility ahead

On Thursday, 5 February, the EUA Dec-26 contract shaved off EUR 4.72/t or 5.7% and settled at EUR 78.20/t. This represents the highest daily decline since 18 February 2024 when the front-Dec contract saw a 6.3% daily drop. The large sell-off came on the back of a Bloomberg news story suggesting that the EU had decided to inflate the supply side of the EU ETS. However, the headline was not substantiated much in the article, which remained rather speculative.