EU CO falls on weaker appetite formidable

LONDON Thu Mar 4, 2010 5:02am EST Related News EU carbon flat ahead of German permit auctionWed, Mar 3 2010EU carbon at 2-week high supported by oil, German powerMon, Mar 1 2010EU carbon recovers to 13 eur/t, utility buying supportsFri, Feb 26 2010EU CO2 lacks direction amid 2010 permit issuanceTue, Feb 23 2010EU carbon gains 2 pct but traders cautiousMon, Feb 22 2010

LONDON (Reuters) - European carbon prices eased on weaker energy prices on Thursday, a day after the futures hit a 3-week high, traders said.

EU Allowances for delivery in December fell by as much as 2.4 percent to 13.22 euros at tonne in early trading. The benchmark contracts then recovered somewhat to 13.36 euros by 4:55 a.m. T, down 18 cents or 1.3 percent.

Volumes were on the light side at 1,800 lots traded.

"Oil, German power and British gas are all lower, and many traders may still be making their way back from Amsterdam," said one broker, referring to an emissions trading conference in the Netherlands this week.

U.S. crude oil futures slid toward $80 on Thursday as the dollar strengthened, pushing the fuel off seven-week highs struck a day earlier as U.S. demand edged up in a recovering economy.

German Calendar 2011 baseload power prices dropped 38 cents to 47.15 euros per megawatt hour while nearby British natural gas futures lost 0.52 pence or 1.7 percent at 30.30 pence per therm.

Spot EUAs trading on BlueNext were down 18 cents or 1.4 percent at 13.17 euros.

The Dec-10 futures briefly broke above their 100-day moving average earlier again on Thursday, but fell back as sellers emerged.

The contracts hit a three-week high of 13.60 euros a tonne on Wednesday on news that the European Commission would begin auctioning EUA futures from 2011.

The European Commission is considering auctioning permits over two main platforms, two leaked documents seen by Reuters on Wednesday showed.

Benchmark CERs dropped by 23 cents or 1.9 percent to 11.91 euros a tonne, setting the EUA-CER spread at around 1.35 euros, the lowest level seen since December. (Reporting by Michael Szabo; Editing by Sue Thomas)