The most recent Commitment of Traders (CoT) report published by the ICE platform revealed that investment funds have expanded their net short positions by 5,5 million allowances. This means that investors continue to strongly believe that carbon prices will decrease in the near future.

Commitment of Traders (CoT) data shows that, as of last Friday, speculative traders have increased their short-term investments by 3,5 million allowances to a record total of 63,9 million allowances.

Sursa: ICE – Commitment of Traders, chart by EMBA Power

Furthermore, funds decreased their long positions by 2 million allowances to almost 25 million allowances. Therefore, the net short (short term positions – long term positions) has now reached a record 38,9 million allowances. The prior record of 33,45 million allowances was reached on 10 November.

 

CoT is a useful source of information regarding the positions and behavior of the largest market players. The report, which has been published each Wednesday by the ICE since 2018, reflects the positions held on the previous Friday by financial institutions and operators with obligations under Directive 2003/87/EC.

 

The document is seen as an analytical tool for traders providing valuable information on the market sentiment: net long positions are associated with bullish bets and vice versa.

 

However, “the emergence of large concentrations of long or short positions can amplify moves in the opposite direction when traders need to stop further losses on poor bets”, warns Montel News.