The price of carbon credits in the EU's emission trading scheme climbed again this morning to €25.10 after the cost of a barrel of crude for October delivery soared yesterday to $120.92, an increase for the day of more than $16.

The price of EUA credits had fallen to €23 last week after oil prices slumped amid fears that the turmoil afflicting the world financial markets would result in a deep recession.

The price of carbon credits is linked to that of oil as lower oil prices result in lower gas prices, which in turn encourage energy producers to switch from burning coal to gas. As gas is less carbon intensive than coal, demand for EUAs falls as energy providers have to buy fewer credits to cover their emissions.

However, oil rallied remarkably yesterday in a move that news agency AFP branded the biggest one-day dollar gain ever.

The soaring price of oil was driven by a drop in value of the dollar, combined with increased demand for commodities as fears that the US government's bail out package for bad dent could be delayed caused traders to once again give stocks a wide berth.

The rebound in the price of EUAs, which are approaching a 30 day high, comes just days after experts predicted the market would not be unduly affected by the crisis afflicting the financial markets.

Last week, analyst firm Point Carbon said a lower than expected supply of the CER credits generated under the UN's Clean Development Mechanism meant that demand for EUAs was set to increase over the next four years, adding that it was upgrading its average price prediction for EUAs during the 2009 to 2012 by €3 to €37 per tonne.

"We expect the EUA price to trade at €25 per tonne for the rest of 2008, and to strengthen further over the coming years," said Kjersti Ulset, manager of EU ETS analysis at Point Carbon.

Meanwhile, the company has also released a new report advising firms to prepare for a post-Kyoto deal that commits developed economies to cutting emissions by 15 per cent on 1990 levels by 2020.

The report accepts the great uncertainty over the nature of a post-Kyoto deal, due to be finalised at talk in Copenhagen in December next year, but predicts that an agreement now looks likely.

It argues that all so-called Annex I countries, including the US and some developing nations, will agree to formal emission reduction targets, while some developing economies will agree to economy wide targets at or just below business as usual.

The report forecasts that the targets would translate into a four per cent reduction of global emissions in 2015 and an eight per cent reduction in 2020, compared to business-as-usual.

However, report author Kjetil Røine admitted that while business would be advised to prepare for such targets, there were still obstacles to be overcome before a deal could be reached.

He said that the EU would have a key role to play in convincing developing economies to accept some emission reduction targets – a scenario that made an agreement including the US "more probable".

He also admitted that the manner in which the new the US President engages in the negotiations would be crucial for the outcome in Copenhagen, but expressed optimism that Obama and McCain's commitment to support the talks increased the likelihood of a deal.