Article / 26 September 2016 at 7:22 GMT

COT: Short-selling of oil jumps ahead of Algiers meeting

Head of Commodity Strategy / Saxo Bank
  • Bullish commodity bets cut by 4%
  • WTI, oil and gold all heavily sold
  • Buying in HG copper, sugar and natural gas

By Ole Hansen

Hedge funds reduced bullish commodity bets by 4% during the week ending September 20 with heavy selling of WTI crude oil, gold and corn more than offsetting buying of HG copper, sugar and not least natural gas.

Speculative positioning in Commodities
Gold net-long reduced for a second week ahead of Bank of Japan and Federal Open Market Committee meetings. Buying fatigue has been seen in both futures and the ETP market following three months of range-bound trading. Since hitting a record on July 5 the net-long has so far been reduced by just 24% compared to the one-third reduction witnessed during the May correction.

Speculative positioning in COMEX Gold futures
Rising supply from Nigeria, Libya and Russia triggered a sizable reduction in bullish bets on WTI crude oil futures. This was not least driven by a 50% jump in the gross-short position. Oil has been sold in three out of the last four weeks during which time the net-long has slumped by 40%. Hopes that the Algiers meeting this week will trigger a price supporting deal have also been fading.

Speculative positioning in WTI Crude oil
After hitting a near-record short three weeks ago copper sellers were forced to cover short positions last week on bullish economic news out of China. A limited amount of fresh buying has been seen with the bulk of the net-short position being driven by short-covering.

Speculative positioning in HG Copper
Funds continue to be rewarded for their months long attraction to sugar. The surge to a new four year high last week supported a 6% jump in bullish bets which are now almost back record territory

Speculative positioning in Sugar
– Edited by Clare MacCarthy

Ole Hansen is head of commodity strategy at Saxo Bank. His Twitter account was cited by MarketWatch as one that investors should follow in 2016.

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commitments of Traders: Commodities

Ole Hansen Ole Hansen
Funds cut combined bullish bets on oil by 105k lots last week ahead of OPEC meeting. Second biggest weekly reduction since at least 2011
Ole Hansen Ole Hansen
Funds cut bullish Brent crude oil bets by 13% to 6-week low as of Sept 20. Longs cut while new shorts were added


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