LONDON (Reuters) - European carbon emissions futures rose on Thursday, moving above the 14-day moving average, after the UK government auctioned 4.5 million carbon permits. EU Allowances for December delivery trading on the European Climate Exchange rose above the 14-day moving average to an intra-day high of 13.23 euros ($18.07) following the auction, before easing to 13.15 euros a tonne at 8:30 a.m. EDT.
Volume was heavy at 7.521 lots traded.
Spot EUAs on BlueNext rose 13 cents or 1.01 percent to 12.99 euros a tonne.
The UK auctioned 4.5 million permits at 13 euros a tonne on Thursday. The auction was a record 12.79 times over-subscribed.
"It was very well subscribed. It could have been due to compliance demand," said an emissions trader, referring to utilities who are buying up EUAs to forward hedge power sales after 2012 when EUA prices are expected to rise.
But other traders were more skeptical about the level of interest in the auction, suspecting that some market participants were deliberately trying to boost prices.
"It looks like someone put 750,000 euros on the table to be sure to buy 4 million EUAs. I am quite anxious someone paid that much money at the auction," another trader said.
Another possible scenario is that some players are replacing CERs intended for 2009 compliance with EUAs given that spot CER trade is largely suspended.
Traders said news this week that CERs had been resold onto the market, resulting in the suspension of spot trade on BlueNext and Nordpool yesterday had undermined confidence in the market.
"Spot isn't the preferred method of trading now as it seems there is the desire to trade bilaterally, with some wanting to check the validity of permits to make sure they are not recycled ones," a third trader said.
U.N.-backed certified emissions reductions (CERs) were up 10 cents or 0.88 percent at 11.47 euros a tonne.
(Reporting by Nina Chestney; Editing by Sue Thomas)
