Article / 19 September 2016 at 7:44 GMT

COT: Oil, natural gas, corn buying offset general weakness

Head of Commodity Strategy / Saxo Bank
  • Week ending September 13 sees strong interest in gas, corn, and WTI crude
  • Crude traders 'continue to be caught on the wrong side of the market'
  • Break of $1,300/oz could see gold resilience start to break down

Hedge funds' have reduced their gold holdings, but the real test of the yellow metal's curious recent resilience will likely come at a break of the $1,300/oz support. Photo: iStock 

By Ole Hansen

Hedge funds increased bullish bets by 15% during the week ending September 13. The buying was concentrated on just three contracts of WTI crude oil, natural gas and corn. 

Overall, 14 out of the 23 futures tracked in this report were net-sold.

Speculative positioning in Commodities

Crude oil traders continue to be caught on the wrong side of the market. Last week, traders reduced both gross long and short positions resulting in a 14% reduction of the net-long. 

This came during a week where the price ended up closing at the lowest in five weeks. 

Speculative positioning in WTI Crude oil
In gold, renewed rate hike speculation and general risk-off sentiment helped trigger the biggest reduction since May. Despite this 11% reduction, however, traders maintained an elevated position ahead of last Friday's US CPI number and this weeks Federal Open Market Committee meeting. 

Gold has been stuck in a decreasing range since June, currently trading between $1,300 and $1,350/oz. During this time, funds have shown a great deal of resilience in holding on to bullish bets, something that will be tested should the price fail to stay above $1,300/oz.

Speculative positioning in COMEX Gold futures

Silver has been net-sold in six out of the last seven weeks. During this time, the net-long has been reduced by 25%, not least due to increased short-selling. 

The gross short rose by 16% to 22,077 lots last week, the highest level since February 2. 

Speculative positioning in COMEX Silver futures
Natural gas traders raised the net-long on the four deliverable Henry Hub gas futures and swap contracts to almost 250,000 lots, the highest in 14 months. The market has been supported by below normal storage injections due to stronger-than-expected late summer demand. 

Speculative positioning in Natural Gas

— Edited by Michael McKenna

Ole Hansen is head of commodity strategy at Saxo Bank 
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Commitments of Traders: Commodity futures

AndrejLences AndrejLences
Nice article. Ole, whats your opinion, can oil go lower this week ? Is it worth risking to short it ? Thank you


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