- Energy, grains sold in week to October 10
- Metals and soft commodities mixed
- Combined bullish bet in oil reduced by 24,000 to 742,000 lots
Hedge funds cut their bullish bet in crude oil over the week
ending October 10. Photo: Shutterstock
By Ole Hansen
Hedge funds cut bullish bets across 26 commodity futures by 6% in the week to October 10. Metals and soft commodities were mixed while energy and grains saw broad-based selling.
The combined bullish bet in oil was reduced by 24,000 to 742,000 lots. In Brent due to long-liquidation and in WTI due to increased short selling. The position change in the two minor contracts of WTI (ICE) and Brent (CME) indicated continued interest in trading a narrowing of the spread between Brent and WTI.
Gold was sold for a fourth week on continued long-liquidation. The net-long was reduced to 68% of the September high, leaving it in a better position to rally in response to the lower dollar and yields that emerged last week following the dovish Federal Open Market Committee minutes and weaker-than-expected inflation data.
So far today, gold and particularly silver have managed to hold onto last week's gains. Gold especially is holding above $1,300/oz with geo-risks from Spain, Iran, and not least Northern Iraq helping to offset headwinds from a recovering dollar.
Copper was bought for the first time in five weeks as the technical rally above $3/lb extended further in response to robust data from China. The 19th National Congress of the Communist Party of China opens October 18 and could have a significant impact on copper and other industrial metals.
Funds increased short bets in corn and wheat ahead of last week’s WASDE report. This helps to explain why both contracts managed to rally from at or near contract lows (December futures) despite a bearish report still focusing on rising supply. The key reversal has increased hope that a major low could be in place but with a massive overhang of supply the best the market probably can hope for at this stage is to see shorts being reduced.
— Edited by Michael McKenna
Ole Hansen is head of commodity strategy at Saxo Bank