Energy: Crude oil, products and natural gas all traded higher during the reporting week, thereby avoiding the post-FOMC weakness that was seen across metals and agriculture. Strong fundamentals driven by OPEC+ keeping supplies tight as global demand recovers helped cushion crude oil with speculators only cutting their net long positions by 1% in both WTI and Brent.
Latest: Crude oil trades steady near the highest since 2018 with market participants expecting OPEC+ will keep supplies tight enough to support current levels. The group meets on Thursday to decide production levels from August and beyond, and the market is currently looking for an increase of 500,000 barrels per day which is less than the increases seen during the past three months. With virus uncertainties due to the highly contagious delta strain and questions about an Iran nuclear deal hanging over the market, the group may opt for caution, hence the current price strength. Brent support at $74.5 while it would need to break below $72 before signaling risk of a deeper correction.
Metals: Speculators made deep cuts to their gold, silver and platinum longs after the FOMC meeting helped boost the dollar while lowering inflation expectations. The accelerated selling that followed the meeting helped drive down gold longs by 33% to 76k lots, a seven-week low and silver by 36% to 29k lots while the 81% reduction in platinum longs returned the position to neutral. Focusing on the latter, the relative strength seen in platinum since the initial sell-off can to a certain extent be explained by speculators rebuilding their long positions.
Latest: Gold continues to consolidate below $1800 with a break above $1820 probably needed to attract short-covering and fresh buying interest, especially after many speculators threw in the towel following the hawkish FOMC meeting on June 16. Before then the market remains focused on the dollar and its recent price adverse strength and whether inflation is indeed transitory, as signaled by central banks, or becoming more entrenched.
Agriculture: Speculators cut bullish grain and soybean bets to a nine-month low with the biggest reductions seen in soybean and bean oil. Bucking the trend we saw the wheat position flipping back to a small net long.