1. Total Weekly Volume of 6.88 M tons   -26% WoW change
2. RGGI ICE weekly average settlement price: $13.47  -1.5% WoW.
3. Managed Money increased short positions by 1.0 M tons, and compliance entities increased long positions by 1.0  M tons. OI increased by 3 million positions as spread positions by swap dealers increased by 2.3 million. 

Summary:

Future’s prices fell 1.7% WoW, and have fallen 4.2% since the beginning of this month. The prices have witnessed a downward spiral ever since the Supreme court move against the EPA, early this month. Pennsylvania’s Commonwealth court issued an injunction order shortly afterward, on the 8th of July, temporarily prohibiting the state from “implementing, administering, or enforcing” the new RGGI regulation till the court considers the merits of the cases. Neither the SC’s ruling against EPA’s right to control emissions nor the Pennsylvania Commonwealth court’s ruling had any impact on RGGI. PA commonwealth court’s injunction was bypassed as the state’s EPA moved to PA’s supreme court. Nevertheless, two RGGI states are ensued in judicial cases against joining the RGGI, and the recent judgment doesn’t seem great for the coalition.

US inflation in June rose to a new 40-year high at 9.1%. The high inflation rate will force the FED to turn hawkish, as the market rises expectations of a 100 basis point rise in interest rates. The rising inflation also means rising recession risks, as the FED desperately attempts to cool a blistering hot economy.

Weekly RGGI Volumes Decline (-26% WoW)

Market Fundamentals 

Trader Positions: 

Managed Money increase short positions 

An analysis of traders’ positions from CFTC data gives us an indication of market sentiments. The data after the Pennsylvania Court injunction order, shows managed money increasing short positions by 1 M tons, while compliance entities increased long positions. OI increased by 3 million. Majority of the new open interest positions were spread positions by swap dealers, with 2.247 million new positions, as rolling over to future contracts begins.

Total Positions (Positions on 12th July)

Compliance Entities (Net Long: 0.9 M tons ): Increased long positions by 1.0 M tons 

  Decreased short positions by 0.1  M tons. 

Managed Money (Net Short: 0.8 M tons ): Increased long positions by 0.2 M tons 

 Increased short positions by 1.0 M tons.

Analyst: Craig Rocha (cmrocha@californiacarbon.info)