Summary:

1. CCA front on Friday closed at 29.94, gaining $0.87 over the week.
2. ICE weekly volume reported as 11.64 M  35.7 M tons (-67.4% WoW), 4-week moving avg. 26.5 M tons.
3. CFTC: Total OI decreased by 11.92M tons (+61.1%). 

On Sunday, the US Senate passed the legislation ‘Inflation Reduction Act’. Even though it is yet to be approved by the House, its passage is now being assumed to be virtually assured. Data shows that this legislation should slash America’s emissions by 40% by the end of this decade, compared with 2005 levels.

California CCA’s observed an increase in price alongside an increase in net short positions by compliance entities and fund managers indicating bearish market sentiments. The decrease in Open interest was due to the entities having completed the rollover to future deliveries. Compliance entities decreased long positions and Managed Money increased long positions as fund managers are opening new long positions.

Technicals: 

Trading activity on the ICE exchange decreased 67.4% WoW to 11.64 M.

Trader Positions:

CFTC V22: Positions across all traders (2nd August)

In the CFTC data last reported on 2nd August, total OI decreased by 11.92M tons. Spread positions declined by 16.2% to 5.9 M tons. The compliance entities decreased long positions by 4.45 M tons (-7.74%) while Managed Money mostly remained unchanged.

CFTC V22: Fund Manager change in positions (2nd August)

Managed money increased long positions by 0.36 M tons, along with a decrease in short positions by 0.011 M tons. Managed Money has been hesitant on opening new positions as in general, fund managers have been facing reduced liquidity. 

CFTC V22: Covered entity change in positions (2nd August)

Compliance entities decreased long positions by 4.45 M tons and decreased short positions by 0.78 M tons. 

Market Fundamentals:

1. Read our latest Analyst Note and forecast on Emissions, Supply, Demand, and Price.

1. On Sunday, the US Senate passed the legislation and though it still has to be approved by the House, its passage is now virtually assured. Independent analysis of the proposed legislation, known as the Inflation Reduction Act, shows it should slash America’s planet-heating emissions by about 40% by the end of the decade, compared with 2005 levels.
2. The Labor Department released its latest monthly jobs report on Friday, showcasing promising numbers. Nonfarm payrolls rose 528,000 for the month and the unemployment rate was 3.5%. The unemployment rate is now back to its pre-pandemic level and tied for the lowest since 1969, though the rate for Blacks rose 0.2 percentage point to 6%.

1. Brent crude settled up 80 cents to $94.92 a barrel, 11% off last Friday’s settlement. U.S. West Texas Intermediate crude settled up 47 cents to $89.01, off 8% in the week.

Analyst: 

Craig Rocha (cmrocha@ckinetics.com)

Megha Jha (mjha@ckinetics.com)