Article / 30 April 2018 at 8:14 GMT

COT: Profit taking hits oil; silver shorts whiplashed – #SaxoStrats

Head of Commodity Strategy / Saxo Bank
  • Leveraged funds reduced bullish commodity bets by 2% in the week to April 24
  • Buying of metals and softs struggled to offset selling in energy, livestock and grains
  • WTI and Brent saw profit taking with some traders booking profit on Iran deal hopes 

By Ole Hansen

Leveraged funds reduced bullish commodity bets by 2% to 2.1 million lots in the week to April 24. Buying of metals and softs struggled to offset selling in energy, livestock and not least grains. 

Speculative positioning in Commodities

Both WTI and Brent saw profit taking with a few traders taking the opportunity to book some profit after President Macron's visit to Washington temporarily raised hopes of a deal on Iran and after Brent and WTI reached $75 and (almost) $70 respectively. Funds overall maintain a very bullish short-term outlook with the combined long anchored above one million lots. 

Geopolitical risks related to Iran sanctions, Venezuelan production trouble and robust global demand has helped support a rising backwardation and with that, rising demand from speculative accounts. 
COT on crude oil
Gasoline saw its net-long hit a fresh record of 111,000 lots with demand and the price expected to remain supported ahead of and during the annual US driving season.  
COT on oil products

Gold was sold while funds flipped their silver position back to long for the first time in 11 weeks. The temporary surge in aluminium saw silver briefly break above its 200-day moving average while strengthening against gold. The rally at the beginning of the reporting week squeezed out the remaining short and by the time it tumbled again on April 23 the selling appetite had failed to recover.

COT on Gold and Silver

Funds added 67% to the net-long in copper as a continued reaction to the increased volatility in aluminium and nickel. Easing trade tensions between China and the US also supported sentiment before the stronger dollar post April 24 began challenging recently established longs.

COT on HG Copper
The grain and soy sector came under renewed selling attacks despite a very slow beginning to the US planting season. All contracts apart from the weather troubled Kansas (hard red winter) wheat crop contract were sold. However, the combined net-long in soybeans, corn and wheat remains at the highest for this time of year since 2014, so we're not seeing any convincing downturn in price optimism yet. 

COT on grains and soybeans
Cocoa buyers extended the net-long to a fresh four-year high following 14 weeks of non-stop accumulation. The sugar short remained close to a record as the sweetener continued its tumble. Coffee buyers returned as the downtrend from 2016 was challenged before eventually being broken on Friday.  

COT on soft commodities

– Edited by Clare MacCarthy


Ole Hansen is head of commodity strategy at Saxo Bank

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COT on commodities in week to April 24


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