Oil has hit a 15-month high on the back of optimism over the Opec deal which needs to be sorted out by November 30. But, with a record long position building across the combined benchmarks, a disappointment could leave some exposed. Full report to come within the hour....
Article / 23 May 2016 at 16:12 GMT

COT: Crude net-long jumped last week as short base collapsed

Head of Commodity Strategy / Saxo Bank
  • Net-buying in all sectors except metals because of aggressive copper selling 
  • Sugar longs hit a new record high 
  • Crude oil net-long jumped by 14% on fresh buying and shorts being reduced 
  • Soybean sector continuing to see strong demand 
  • Gold net-long only seeing a small reduction despite headwinds from stronger USD 
 Most commodities shone last week but copper got hammered. Pic: iStock

By Ole Hansen

Hedge funds increased commodity bets by 3% to 1.15 million lots, a two-year high, during the week ending May 17. Net buying was seen across all sectors apart from metals due to a second week of aggressive copper selling. Sugar longs hit a new record while crude oil longs jumped as the short base continued to dwindle on both WTI and Brent. 

Speculative positioning in Commodities

Sugar longs hit a new record while crude oil longs jumped as the short base continued to dwindle on both WTI and Brent. 

Speculative positioning in Commodities

The combined net-long on WTI and Brent crude jumped 75 million barrels during the week where traders were chasing the $50 level.

Combined oil positioning
Brent crude in particular saw continued reduction of short positions. This resulted in the long/short ratio reaching a new record above 16, meaning for every short position there are currently more than 16 longs.

Speculative positioning in WTI Crude oil

– Edited by Clare MacCarthy

Ole Hansen is head of commodity strategy at Saxo Bank. His Twitter account was cited by MarketWatch as one that investors should follow in 2016.

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Commitments of Traders: Commodities

23 May
fxtime fxtime
A 16:1 ratio seems more a tulip mania considering the increasing flotilla of crude stock holding. Whilst we have large outages on the world markets we aren't seeing a lift in the physical (deliverable) world demand curve imho.
23 May
Ole Hansen Ole Hansen
Hi fxtime. That is an increased risk that can not be ignored. The question right now is what will be the trigger? The seasonal inventory draw/increased refinery activity will provide support together with continued supply disruptions. On the other hand a halt to the slowdown in the weekly production estimates could send a scare through the (bull) market. Put options look like an interesting approach as a way of catching a potential wash-out as it may not become the focus before July.
23 May
fxtime fxtime
TOTALLY agree.....the safest route is via options. Straddle/Strangle OTM may be the safest but there are plenty of defined risk strategies available. Canada and Iran will likely be the quickest to fill supply disruptions as iran can soak any supply issues and Canada will soon return to its normal output...if the dollar increases its buying power we have another repricing effect too.


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