COT: Rising oil short; Specs left blindsided in natural gas and coffee COT: Rising oil short; Specs left blindsided in natural gas and coffee COT: Rising oil short; Specs left blindsided in natural gas and coffee

COT: Rising oil short; Specs left blindsided in natural gas and coffee

Ole Hansen

Head of Commodity Strategy

Summary:  The Commitments of Traders report covering commodity positions held and changes made by money managers in the week to September 8. Risk appetite returned with the S&P 500 Index rising by 2.1% while the dollar traded lower and bonds were unchanged. The commodity sector saw broad gains with hedge funds continuing to accumulate longs in grains and metals while energy and softs were mixed.

Saxo Bank publishes two weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.

This summary highlights futures positions and changes made by speculators such as hedge funds and CTA’s across 24 major commodity futures up until last Tuesday, September 15.

The Bloomberg Commodity Index rose by 0.6% with price gains seen in all but four of the 24 major futures market tracked in this report. The change was in response to a weaker dollar, improved risk sentiment as U.S. mega cap stocks bounced and not least continued strong demand from China where some key economic data surprised to the upside.

Rising prices saw hedge fund demand for commodities resume with all sectors apart from energy and softs seeing net buying with the total net-long rising by 4% to 1.84 million lots. The grain sector led from the front with corn and the soybean complex continuing to see strong buying interest while all metals led by copper and gold were bought.

Energy:  Position changes across the energy sector were particularly interesting, not least considering some of the market developments that unfolded following last Tuesday. Crude oil was mixed with a 25.9k lots increase in WTI and a 39.9k reduction in Brent reducing the combined long by 3.5% to 376.7k lots, a five-months low. This before Saudi Arabia’s warning to OPEC+ cheaters and short-sellers helped oil to its best week since June. Since July when fundamentals, but not the oil price, started to weaken, the gross short held by funds in WTI and Brent crude has more than doubled to reach 248k lots.

It was this development that the Saudi oil minister saw as a worry but also an opportunity to force the price higher through short-covering. While short sellers may move the market for a short period of time, fundamentals will always be the main driver. And while the recent 15% correction in Brent crude oil helped to bring the price more in line with current fundamentals, a recovery from here needs more than verbal intervention, despite it coming from the world’s biggest producer.

Natural gas bulls found themselves caught on the wrong side of the market after increasing their net-long in four Henry Hub deliverable futures and swap contracts to the 325k lots, the highest since May 2017. Lower demand triggered by lockdowns and Hurricane Sally disruptions impacting both demand and exports helped drive a bigger-than-expected weekly inventory build, As a result the price cratered before finding support at a key technical level below $2/MMBtu.



Metal: Despite being stuck in neutral, gold and silver bulls added length to both contracts. Signs of an improved outlook for platinum helped drive a near doubling of the net-long to 11.5k lots. Copper buying continued with the price being supported by strong Chinese demand and falling global inventories. The net long reached 76.7k lots, the highest since June 2018.

In our latest Commodity Weekly, we described gold as being passive given that most of the recent price impact has come from its current and unusual  positive correlation to the risk appetite being dictated by U.S. mega-cap stocks. Correlations, often picked up and strengthened by algorithmic trading systems, work until they don’t. With this mind an interesting week awaits given the risk of a deeper stock market correction following Friday’s week close on Wall Street.

Precious and industrial metals

Agriculture: The grain sector led by corn and the soybean complex continues to be bought, thereby defying the seasonal trend which tends to see crops being sold ahead of U.S. harvest. The top global buyer China continue its record pace of soybeans buying as it seeks supplies to feed a post African swine fever rebuild of its massive hog herd.

Key U.S. crop futures

Soft commodities were mixed with the sugar long being reduced for a second week while the Arabica coffee net-long reached the highest since November 2016. This before suffering its worst week in 22 years on reports that warehouses in Brazil, the world’s biggest grower and exporter, have never been this full. Lockdowns and the work-from-home phenomenon keeping consumers away from cafes and restaurants.

Soft commodities
What is the Commitments of Traders report?

The Commitments of Traders (COT) report is issued by the US Commodity Futures Trading Commission (CFTC) every Friday at 15:30 EST with data from the week ending the previous Tuesday. The report breaks down the open interest across major futures markets from bonds, stock index, currencies and commodities. The ICE Futures Europe Exchange issues a similar report, also on Fridays, covering Brent crude oil and gas oil.

In commodities, the open interest is broken into the following categories: Producer/Merchant/Processor/User; Swap Dealers; Managed Money and other.

In financials the categories are Dealer/Intermediary; Asset Manager/Institutional; Managed Money and other.

Our focus is primarily on the behaviour of Managed Money traders such as commodity trading advisors (CTA), commodity pool operators (CPO), and unregistered funds.

They are likely to have tight stops and no underlying exposure that is being hedged. This makes them most reactive to changes in fundamental or technical price developments. It provides views about major trends but also helps to decipher when a reversal is looming.

Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (
- Analysis Disclaimer (
- Notification on Non-Independent Investment Research (

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.