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EU Carbon Permits Drop to Lowest Since July 30 on Offset Supply

| Sourced From Sfgate |

Dec. 17 (Bloomberg) — European Union carbon permits fell to their lowest price since July 30 as the United Nations- overseen regulator boosted the supply of offset credits.

EU carbon futures for December fell as much as 1.8 percent to 13.99 euros ($18.57) a metric ton on ICE Futures Europe. They are down 4.1 percent this week, reducing this year’s gain to 12 percent. UN emission credits for December fell 1.2 percent to 11.75 euros, reducing this year’s gain to 7 percent.

The supply of new credits in the UN’s Clean Development Mechanism, the world’s second biggest greenhouse-gas market, will come close this month to reaching last month’s record, IDEAcarbon said in an e-mailed statement. Issuance may reach 24.4 million metric tons, compared with a record 24.8 million tons in November, Alessandro Vitelli, an analyst at IDEAcarbon in London, said by phone today. The credits can be used in the EU carbon market. Issuance-request data suggests January supply will reach about 12.7 million in the first half of the month, Vitelli said.

The EU is trying to reduce a glut of carbon permits in its market, the world’s largest, after the economic recession last year damped demand for allowances and credits. The market will be oversupplied by about 5.9 percent in the five years through 2012, according to a model by Bloomberg New Energy Finance, the carbon-research company based in London that’s owned by Bloomberg LLP.

EU permits for December may fall to 13.34 euros a ton after the contract breached a technical support level at 14.15 euros, said Clive Lambert, an analyst at Futures Tech.

There’s a chance that EU carbon permits for December will fall as low as 12.75 euros by Dec. 20, when the futures contract expires, says Brett Genus, emissions options broker at OTC Europe LLP.

Genus said EU carbon prices showed a “dark cloud” formation on Dec. 10, a bearish signal formed at the end of an uptrend. Some analysts believe that indicates the market is overbought.

–Editors: Mike Anderson, John Buckley.

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