The European carbon market rose modestly on Wednesday, breaking unexpectedly its usual correlation with natural gas prices. EUAs finished the session with a 0.42% daily gain, trading within their tightest range of the year.

Meanwhile, TTF gas dropped 4,5% most likely as a reaction to the latest Commitment of Traders (CoT) report published by ICE and news regarding some flexibility from the European Commission regarding refilling gas storage facilities. 

Trading data regarding the gas market showed that investment funds have reduced their net long positions “to the lowest level since late July,” as stated by Bloomberg. Furthermore, long term holding “fell by the most in more than three years,” suggesting that “some investors pull out of the market amid mounting geopolitical uncertainties.”

The European gas market also reacted to the European Commission’s proposal to provide Member States with some flexibility during the summer season, despite maintaining storage requirements to 90% of capacity by each November until 2027.

“These targets are indicative and should allow for storage filling in such a way that there is sufficient flexibility available for market participants throughout the year,” said the proposal referring to intermediary filling objectives for this summer. Furthermore, the Commission allows Member States to meet the 90% target on 1 December instead of November in case of “technical issues, such as pipeline constraints or injection facility problems, or in case of specific market conditions.”

The downward trend continued early Thursday, with carbon prices once again tracking natural gas, as long-term weather forecasts suggest mild conditions in the second half of the month following a brief colder spell next week.