LONDON (Reuters) - Benchmark European Union carbon emissions permits held onto gains on Thursday, boosted by increased buying and firmer oil prices, traders said.
EU Allowances traded up 50 cents or 6.1 percent at 8.57 euros a ton on volumes of 4,534 lots traded at 1455 GMT.
The Dec-09 futures jumped 95 cents or 11.6 percent to 9.15 euros earlier in the session, but quickly retraced its steps to around 8.30.
"From what I saw, that the work of one institution, both on the way up and on the way down," one emissions trader said.
"Liquidity is pretty thin and volumes are not that great."
Benchmark U.S. oil futures were 1.20 higher at $35.18, snapping a five-day losing streak following a rally in U.S. equities on news the government was working on a mortgage plan.
On Thursday, 2009 EUAs hit an all-time low of 8.05 euros a ton, some 50 percent below December prices.
"It's difficult to tell if that was the bottom, as people are still cautious about going long," the trader said. "I wouldn't be surprised if we go sideways for the next week."
The supply of EU allowances (EUAs) will increase over coming weeks, as EU countries issue industry's 2009 quota before a February 28 deadline, and when Britain auctions permits in mid-March.
After that prices could recover from their record lows, traders say. Benchmark Certified Emissions Reductions (CERs) traded up 56 cents at 7.95 euros.
The carbon price follows expected long-term demand for emissions permits, which has sagged on expected falling industrial output. In addition, prices are influenced by short-term changes in supply and by energy and power prices.
For additional news and analysis on the global carbon markets, go to http://www.communities.thomsonreuters.com
(Reporting by Michael Szabo and Gerard Wynn, Editing by Sue Thomas)
