Article / 16 October 2017 at 8:00 GMT

COT: Oil and gold longs reduced during last week's rally — #SaxoStrats

Head of Commodity Strategy / Saxo Bank
Denmark
  • 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

Crude oil
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.

Speculative positioning in Commodities
























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. 

COT on crude oil





















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. 

COT on metals
 
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.

COT on grains
 

— Edited by Michael McKenna

Ole Hansen is head of commodity strategy at Saxo Bank

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Commitments of Traders: Commodities

2y
Ole Hansen Ole Hansen
Crude oil trading higher by 1% this Monday with headlines from the Northern Iraq the main driver. https://www.bloomberg.com/gadfly/articles/2017-10-15/iran-s-a-distraction-the-urgent-problem-is-kurdish-oil
Recent headlines from Reuters:
OIL, NATURAL GAS PRODUCTION FROM KIRKUK PROCEEDING NORMALLY DESPITE MILITARY OPERATION, IRAQI OIL MINISTRY OFFICIAL SAYS
KURDISH LEADERS HAVE AGREED TO AVOID FIGHTING IN KIRKUK'S OIL, GAS FACILITIES, IRAQI OIL MINISTRY OFFICIAL SAYS
And latest:
IRAQI FORCES SEIZE THE NORTH OIL COMPANY HEADQUARTERS, NORTH WEST OF KIRKUK, IRAQI OIL OFFICIALS SAY; HQ PREVIOUSLY UNDER KURDISH CONTROL

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