Head of Commodity Strategy
Summary: The weekly Commitments of Traders reports are not being published during the US government shutdown, but ICE Futures Europe Exchange data show money managers increasing their bets on Brent crude oil during the week to January 15.
During the past two reporting weeks ,when Brent rallied by almost 13%, the net-long rose by 21,000 lots with two-thirds of the change being short-covering while fresh buying only accounted for one-third or 7,000 lots. This highlights a continued hesitancy from macro funds using oil as a proxy for global growth, and with that demand for crude oil.
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.