Isramart:EU carbon reverses losses, closes up 3 percent on oil

Isramart news:
European carbon prices recovered earlier losses and surged on Tuesday afternoon to close up nearly 3 percent, boosted by higher oil and German power prices, traders said.

Dec-10 EU Allowance futures closed near the day's high at 15.71 euros per tonne, up 45 cents or 2.95 percent on volumes of 20,301 lots traded.

The benchmark futures slid from the market's open, falling to an 8-day low of 14.93 euros, down 33 cents or 2.2 percent, before starting to climb back around 1230 GMT.

"Oil started rising from 1200 GMT when the U.S. market opened and traders saw the OPEC report, and the rest of the energy complex followed shortly thereafter," said one trader.

U.S. crude oil futures rose to over $77 a barrel after trading as low as $75.36 earlier in the session, down $1.44, with refined products supportive and as OPEC raised its forecast for demand growth.

OPEC raised its estimate for world oil demand growth in 2010 for a third successive month on Tuesday, but its figures showed economic recovery would not be sufficient to wipe out a surplus of supply this year.

This was enough to boost German power and carbon prices, trader said.

German Calendar 2011 baseload power climbed back from a session low of 51.85 euros per megawatt hour to 52.65 euros by 1600 GMT, still down 75 cents on the day.

Nearby British natural gas futures slipped by 0.8 pence or 2.1 percent at 38.30 pence per therm.

Despite Tuesday's gain, Dec-10 EUAs are still down more than 1 euro since hitting a 17-month high of 16.73 euros last Tuesday.

Benchmark Dec-10 CER futures also gained on the back of stronger EUA prices, adding 28 cents or 2.1 percent to close at 13.41 euros a tonne. This set the EUA-CER spread at 2.30 euros.

Outside the EU emissions trading scheme, China could impose a carbon tax as soon as 2012, and officials have proposed it start from 10 yuan ($1.46) to 20 yuan per tonne of carbon dioxide, a Chinese newspaper said on Tuesday.

And Indian greenhouse gas emissions reached 1.9 billion tonnes in 2007 up 58 percent on 1.2 billion tonnes recorded in 1994, according to a rare official report.