The latest Commitments of Traders (CoT) report from ICE, released on Wednesday, shows that investment funds slightly reduced their net long positions, the difference between long and short positions, in the carbon market.

According to market data available as of last Friday, net long positions declined by 1.29 million allowances compared with the previous week, bringing the total to 35.8 million allowances, a weekly decrease of 3.5%.

The data also show that the reduction was driven almost entirely by an increase in short positions, which rose by 5%, from 28.7 million allowances to 30.1 million allowances. Meanwhile, speculative traders maintained their long positions, which remained virtually unchanged, rising slightly from 65.8 million allowances to 65.9 million allowances.

The increase in short positions, alongside broadly stable long exposure, suggests that speculative traders are becoming more cautious about the near-term outlook for carbon prices. While bearish positioning is increasing, investors holding long positions have not significantly reduced their exposure, indicating that bullish sentiment remains relatively resilient.

Although speculative positioning is generally closely linked to EUA price movements, carbon prices still gained around 1% over the week despite the decline in net long positions. These developments suggest that traders remain cautious, maintaining their existing positions while refraining from making stronger directional bets amid continued uncertainty over the near-term outlook for carbon prices.