Carbon contracts firming up

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

29 Nov 2009

Crude oil prices are weaker this morning. In equity markets, Japan’s Nikkei shed 3.22% despite better-than-expected unemployment data, which showed the country’s unemployment rate at 5.1% m/m in October against market expectations at 5.4% m/m; China’s Shanghai Composite retreated 2.36% this morning. Front-month WTI crude oil slid from $76.40/bbl to as low as $72.40/bbl early this morning. While WTI has bounced back from the lows, it has broken below important support at $75. The weak crude oil demand prognosis, which came from this week’s API and DOE crude and distillate inventory data, coupled with reduced investor risk appetite, is weighing on the frontend of the WTI curve. Equity index futures are pricing in losses in Europe and the US today, which may make it difficult for crude to regain losses.
Increased investor risk aversion has seen the dollar climb from $1.5013 to $1.4829 against the euro. This could add more weight on the front-end of the WTI crude oil forward curve — with the rolling correlation between front-month WTI crude and the trade-weighted US dollar rising from -0.61, yesterday to -0.79 this morning.
Thermal coal contracts were mixed yesterday as the Baltic Dry index endured its 4th decline this week, sliding 2.7%. API2 (CIF ARA) for December delivery contracted $0.30/mt, to $77.10/mt. Despite the C4 spot index (a measure of freight rates between Richards Bay and Rotterdam) sliding 3.2% yesterday, API4(FOB) gained $0.70/mt, to $68.30/mt.
Carbon contracts firmed yesterday amid higher German base load power prices. ICE EUA for December delivery gained EUR0.10/mtCO2 TO EUR12.98/mtCO2. UN-backed CER for December delivery gained EUR0.10/mtCO2, to EUR12.08/ mtCO2.

Source: Commodity Online