The latest Commitment of Traders (CoT) report from ICE, released on Wednesday morning, shows that investment funds reduced their net long positions—the difference between long and short positions—to their lowest level in almost four months.

According to market data available as of last Friday, net long positions declined by 5.7 million allowances compared with the previous week, representing a 12.8% drop and bringing the overall net long position to 38.67 million allowances, a level last seen at the beginning of May.

The decrease in the net long position was driven by movements on both sides of the market, as speculative traders reduced their long positions by 5 million allowances to a total of 60 million allowances, their lowest level in a year.

Meanwhile, investment funds added 0.67 million allowances to their short positions, bringing the total to 21.3 million allowances. The increase was relatively modest compared with the 5 million-allowance reduction in long positions, meaning that the sharp decline in net length was driven predominantly by traders unwinding bullish bets rather than aggressively building bearish positions.

The shift in sentiment reflected in ICE’s latest Commitment of Traders report closely mirrored recent market movements, with the reduction in speculative net long positions coinciding with weaker carbon prices over the same period, as the Dec-26 EUA contract declined by 1.8% week-on-week.