Investment funds increased their net long positions in carbon allowances by 15.5% last week, according to the latest Commitment of Traders (CoT) report released by ICE on Wednesday, signalling a strengthening bullish outlook among speculative traders.

Data covering positions as of last Friday showed that net long holdings—the difference between long and short positions—rose by 4.86 million allowances week-on-week to approximately 35.5 million allowances, marking their largest weekly increase in four months.

The increase was driven entirely by the long side of the market, with gross long positions climbing 8% to around 67 million allowances, their highest level in three months, while short positions remained broadly unchanged.

Speculative fund positioning is closely watched as a gauge of market sentiment, as shifts in long and short exposure offer insights into investors’ expectations for future carbon prices.

The latest figures suggest strengthening bullish conviction among speculative traders rather than a retreat in bearish sentiment. However, net long positioning remains well below January levels, indicating that bullish exposure has yet to recover to its earlier highs despite the recent increase.