The weekly report of the Commitment of Traders (CoT), published by the ICE platform this morning revealed that investment funds have reduced their net long positions (long term positions – short term positions ) to 15,8 million allowances, down by nearly 50% compared to the previous report.

Figure shows that, in the week ending April 4, speculators have reduced their long holdings by a massive 18% from 71,9 million allowances to 59 million allowances. During the same interval, funds have increased their short investments by 1,6 million allowances from 41,7 million allowances to 43,3 million allowances. 

As a result, net long holdings have dropped to their lowest level so far this year, “confirming the liquidation of assets we have seen in carbon and other markets since the Reciprocal Tariffs shock”, as stated by Yan Qin, carbon analyst at ClearBlue Markets. 

Participants view the positions of speculators as an indicator of market sentiment. “Net long” indicates that investors are betting on the carbon price to increase while “net short” suggests that investors are betting on a decrease in EUAs. At this pace, it is highly likely that funds would soon switch from net long to net short which would suggest a preference for buying.

The sentiment reflected in the most recent report by ICE is once again confirmed by trading data. The EUAs declined in four trading sessions out of five during last week, closing with a 7,24% weekly loss.