According to the latest Commitment of Traders (CoT) report published by ICE on Wednesday, investment funds sharply expanded their net long position (long positions minus short positions) in European carbon allowances (EUAs) during the previous week, signalling growing confidence in higher carbon prices.

Data available as of 19 June showed that speculative investors substantially increased their bullish exposure to the EU carbon market, adding 14 million allowances to their net long position over the previous week.

This represented a 31% increase, bringing the total to 58.9 million allowances. The sharp rise in positioning reflected growing confidence in higher EUA prices and pushed speculative net longs to their highest level in four months.

Funds added 10.7 million allowances to their long positions, bringing the total to 76.37 million, while reducing short positions by 3.18 million allowances to 17.47 million. This marked a multi-year low in bearish positioning, well below the previous record low of 20 million allowances.

The bullish sentiment captured in ICE’s report was mirrored in market activity. European carbon prices ended Friday’s session at €80.58, their strongest settlement in three weeks, posting a 4.4% weekly gain.