Article / 02 October 2017 at 8:05 GMT

COT: Continued rotation out of metals into energy – #SaxoStrats

Head of Commodity Strategy / Saxo Bank
Denmark
  • Unchanged commodities exposure of 1.7 million lots in week to September 26
  • Rotation out of metals into energy continued but bullish bets look stretched
  • Brent crude the most exposed, especially after last week’s jump in US crude exports
  • Gold and silver were both sold for a second week in response to September reversal
  • Agri sector was mixed with soybeans and wheat seeing strong buying
gold and silver
 The great rotation out of metals and into energy continues. Photo: Shutterstock.

By Ole Hansen

Hedge funds maintained an unchanged commodities exposure of 1.7 million lots in the week to September 26. Most noticeably was the continued rotation out of metals into energy where bullish bet looks increasingly stretched. 

Speculative positioning in Commodities
 
Bullish bets on the energy sector look increasingly stretched with most apart from WTI reaching year or even record highs. Brent crude is currently the most exposed, not least following last week’s jump in US crude exports. Additional supply to the global market could see both Brent’s backwardation and premium to WTI being reduced. The net-long in WTI crude oil jumped by 43,500 lots but from a lower base and it left the net-long at 61% of the February record.

NB: I have added Brent traded on CME in this week’s table. This contract (ticker: BZ) copies the big Brent traded on ICE and is a popular for spread trading. The record short of 26k lots could indicate a pickup in the short selling of the Brent/WTI spread. 

COT: Brent Crude oil
 
Lower refinery margins as witnessed last week may also spell trouble for the combined record long currently held in the refined product futures of gas oil, ULSD and RBOB.

COT: Refined product futures
Gold and silver were both sold for a second week in response to the sharp reversal witnessed during September. Having retraced 50% of the July to September rally gold need to find support ahead of $1260 in order to avoid accelerated long liquidation. Traders remain torn between focusing on US rate hikes and Trumpflation against continued and elevated geo-risks.  

COT: Metals


The agriculture sector was mixed with soybeans and wheat seeing strong buying. Funds remain net-short the grains sector amid rising stocks. The International Grain Council expecting this year’s global crop to be the second largest on record.

COT: Grains and soybeans
 
Soft commodities:
 

– Edited by Clare MacCarthy

 

Ole Hansen is head of commodity strategy at Saxo Bank



Download document

Commitments of Traders: Commodities

2y
AIRLINE AIRLINE
Hi Ole,

Interesting what you mention regarding Brent (BZ) at CME as well as Brent/WTI spread. Perhaps you could include this and inform a little about the possibilities for commodity spread trading during your next commodity seminar on 19. Oct.?

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