According to yesterday’s latest Commitment of Traders (CoT) data, investment funds cut their short position last week by almost 13%, from 56,5 million allowances to 49,7 million allowances. Meanwhile, speculators have reduced their long positions as well,  from 41,4 million allowances to 39,3 million.

Consequently, investment funds were net short (short positions- long positions) by 10,55 million allowances last week, the lowest level since the end of August. Compared to a net short of 15 million allowances in the prior week ending on 25 October, the decline is almost 30%. 

Weekly positions held by investors indicate market participants where they believe the carbon price will go. Net long means that speculators are buying more than they are selling. Conversely, net short suggests that investors are selling more than they are buying. Therefore, net short positions are associated with bearish bets.

Investment funds have reduced their net short positions since early October when the figure reached 26,1 million allowances, suggesting that investors are no longer convinced that the price should go lower and positioned accordingly.

However, the report failed to provide much direction yesterday, even though typically, the market reacts almost immediately after the report becomes available as the traders were too busy to digest potential implications of Donald Trump’s reelection.