Summary:
CCA prices stabilized last week, after the JA 32 auction and California’s legislative session come to an end. Compliance entities increased long positions by 1.56 M tons while Managed money decreased long positions by 0.72 M tons. Overall, OI declined by 1.19 M tons over the last week.
The Legislature session saw two major updates that are quickening the reduction of emissions, but the impact on the Cap-and-trade remains mixed.
The market sentiment is clouded with uncertainty about the future as the risk of inflation, further interest hikes, and oil prices continue to loom. US FED Chair Jerome Powell’s speech at the Jackson Hole conference two weeks ago indicated towards another interest hike to achieve FED’s 2% inflation goal. Yesterday, US Treasury Secretary Janet Yellen also said that the United States faces a risk of recession as it continues to battle against inflation and anticipates its role in slowing down the economy. Oil prices also witnessed a fall today as market entities expect an interest hike by FED in the coming days. The front is now trading at a 36% premium to 2022’s floor price, and 27% above next year’s expected floor price (CPI at 7%). The low trading price makes the CCA allowances a lucrative investment.
Technicals:
Trading activity on the ICE exchange decreased 49% WoW to 27.26 M tons.
Trader Positions:
CFTC V22: Positions across all traders (6th September)
In the CFTC data last reported on 6th September 2022, total OI decreased by 1.19 M tons. The compliance entities increased long positions by 1.56 M tons while Managed money decreased long positions by 0.72 M tons.
CFTC V22: Fund Manager change in positions (6th September)
Managed money decreased long positions by 0.72 M tons, along with a decrease in short positions by 0.29 M tons.
CFTC V22: Covered entity change in positions (6th September)
Compliance entities increased long positions by 1.56 M tons and increased short positions by 0.17 M tons.
Market Fundamentals:
Analyst:
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