Carbon Overtakes Gasoil as Open Interest Surged 55% in Past Year - Bloomberg

Open interest in European Union carbon futures on the ICE Futures Europe exchange overtook those in gasoil after surging 55 percent last year, making emissions the second biggest market by that measure after Brent crude. Open interest for EU carbon contracts aggregated across all expirations as of March 1 was 643,000 contracts, compared with 416,000 on the same day last year, according to data from ICE Futures Europe. Interest in carbon has surged as the bloc begins to sell nearly all allowances to power utilities rather than giving most of them for free. They have plunged 46 percent in the past year, on concern about oversupply. They’ve rebounded by more than a third since Jan. 4, when they reached a record low. “Among energy markets, carbon is the second most liquid after crude” in Europe, said Mark Owen-Lloyd, head of carbon trading at CF Partners (U.K.) LLP in London. “Banks, utilities, proprietary traders can all access it and they do,” Owen Lloyd said in an interview March 1, citing volumes on ICE Futures Europe and open interest. “As a proxy for the energy markets, carbon is the best way in.” Brent crude open interest was 1.1 million contracts on March 1, up 25 percent from 882,000 a year earlier. Gasoil was at 529,000 contracts, 24 percent less than the year earlier’s 693,000.