Contrary to the upward momentum anticipated by many following President Trump’s rollback of tariff threats, European carbon prices moved lower on Wednesday, erasing all of the previous session’s gains. The December 2025 EUA contract settled at €86.54, down 2% on the day, marking its largest daily decline in a week.

The sell-off appeared to be a reaction to the latest Commitment of Traders (CoT) report released earlier in the day. Market data showed a 10.7% weekly reduction in net long speculative positions, while falling gas prices added further bearish pressure on carbon allowances.

Daily trading volumes for EUA Dec’25

Traded volumes were also elevated, with 52.9 million allowances changing hands—around double last year’s daily average—though still well below the all-time daily record of 157 million allowances traded last Tuesday. The high turnover continues to suggest that speculative participants are reducing their exposure, a trend we expect the next Commitment of Traders report to confirm.

The downward trend extended into early Thursday, with EUA Dec ’25 prices falling close to their lowest level in almost two months, seemingly ignoring a rebound in gas prices. The TTF front-month contract was up around 2% in morning trade, as “low storage levels and cold weather expectations lifted supply concerns,” according to Trading Economics.

At present, the carbon market appears to be overlooking bullish analyst forecasts—largely based on tightening emissions caps and reduced free allocations—and reacting instead more strongly to shifts in speculative positioning. An article published by the Financial Times yesterday quoted Casey Dwyer, managing partner at commodity investment firm Lattis, predicting that “carbon permits [could rise] above €100 per tonne this year.”

Meanwhile, analysts at Global Risk Management, quoted by Montel News in an article also published yesterday, expect carbon prices to average around €98/t in 2026 and exceed €100/t during the second half of the year.

More cautious projections from ING analysts published last week see prices averaging €84 this year. While agreeing that “structurally, EU ETS supply is set to remain tight, supporting higher prices,” ING also notes that “high speculative activity and policy uncertainties, such as delayed free allowance phaseouts, pose downside risks.”