02 January 2018 at 8:20 GMT
- Traders kick off 2018 with two major positions
- Hedge funds are long in EUR and short in JPY
- Bullish bets in energy and metals increased
The big freeze across north-eastern America caught natural gas traders by surprise.
By Ole Hansen
Hedge funds increased bullish bets in energy and metals during the week to December 26. A record short across the key grain futures expanded further while short covering supported the soft sector.
Multiple supply disruptions during Q4 ensured an end of year sprint in crude oil. This left the combined net-long across WTI and Brent at a record 977 million barrels
NatGas traders were caught out as colder than normal temperatures across the US northeast helped trigger a surge back above $3/therm. The net-long did rise 21% to 56,000 lots but was well below the 233,000 lots seen just a month ago.
Gold was bought for a second week as the market continued to rally amid a weaker dollar post the December FOMC rate hike. The net-short in silver was cut by half and could be exposed to continued short-covering due to tail wind from both gold and copper.
The non-commercial dollar short against eight IMM currency futures returned to neutral in the quiet trading week to December 26.
Traders will kick off 2018 with two major positions; a long in EUR being offset by a short in JPY.
The recently established short positions in AUD and NZD expanded further while the biggest change was the 62% reduction in the CAD net-long. This despite seeing the CAD reach a two-months high supported by rising crude oil prices.
Bonds and stock index futures:
– Edited by Clare MacCarthy
Ole Hansen is head of commodity strategy at Saxo Bank