According to yesterday’s latest Commitment of Traders (CoT) data, investment funds cut their short position last week by almost 25%. Speculators increased their long positions by almost 1 million to a total of 27,57 million allowances, while reducing their short positions by an incredible 11,45 million allowances.

Consequently, investment funds were net short (short positions- long positions) by 9,69 million allowances last week. Compared to a net short of 22,01 million allowances in the week ending on 6 October, the decline is more than half. This type of pivoting means that market players are “reducing their bets on falling carbon prices,” as stated by Montel News.

While the massive reduction came as a surprise, the report failed to provide much direction yesterday, even though typically, the market reacts almost immediately after the report becomes available. “The market seems muted towards the new COT data released today,” noticed Tan Luyue, carbon analyst at Refinitiv Carbon.

Source: Commitment of Traders, chart by EMBA Power

The report has been published each Wednesday by the ICE platform since 2018,  reflecting the positions held on the previous Friday by financial institutions and operators with Obligations Under Directive 2003/87/EC.