Article / 22 December 2014 at 7:45 GMT

COT: Bullish bets on WTI crude oil raised to 4-month high

Head of Commodity Strategy / Saxo Bank
Denmark
By Ole Hansen

Hedge funds continued to buy WTI crude oil futures during the week ending December 16 despite a 12 percent drop in price. Overall it was a mixed week for the 24 commodities tracked in this report with the total net-long falling by just 8,000 lots to 931,000 with gains in energy (WTI crude) and grains (wheat) being offset by losses in metals (silver), livestock (hogs) and not least softs (sugar).

Speculative position in Commodities
 
Just like we have seen during the previous few weeks of heavy losses in crude oil, hedge funds have continued to buy into the weakness as they look for a bottom in the market. So far they have failed to find it with the net-long having risen by 55,700 lots since November 25 and during this time the price has collapsed by one-quarter.

As the graph below shows, the rising net-long has been driven by a combination of shorts being reduced and longs being added.

Speculative position in WTI Crude
 
A sharp rise in Russian food inflation as a result of sanctions and a tumbling ruble has led to worries about an export ban on Russian wheat. This fear drove the price of CBOT wheat up by 6.4 percent and it triggered some additional short covering. As a result we saw the net-long position rise to a seven month high on speculation that export demand for US wheat may rise.

 

— Edited by Clare MacCarthy

Ole Hansen is head of commodity strategy at Saxo Bank

Download document

Commitment of Traders: Commodities

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Tradingfloor.com permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Tradingfloor.com and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Tradingfloor.com is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Tradingfloor.com or as a result of the use of the Tradingfloor.com. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through Tradingfloor.com your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. Tradingfloor.com does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail