COT: Heavy selling of commodities, buying of dollars
Head of Commodity Strategy
Summary: Weekly data compiled in the Commitments of Traders report is now just a few days away from being “live” again following the long process of catching up after the December to January US government shutdown.
Below please find data in Brent and gasoil covering the week to February 26 (unaffected by shutdown) and for all other commodities, forex, bonds and stock index futures from the week to February 19.
Speculators increased bullish bets on Brent crude oil by 15.9k lots to 291k lots, a near four-month high. The increase was driven by the supportive news from the US-China trade negotiations and occurred despite President Trump’s renewed attack on Opec in response WTI and Brent crude oil’s race towards $60/b and $70/b respectively. In a tweet last Monday he asked Opec to take it easy on production cuts, saying that the world is too fragile to handle price hikes at this stage.
Despite a speedy recovery following the Trump tweet an almost non-stop accumulation of longs since early December has left Brent crude oil struggling for fresh input to take it higher. For now it has settled into a $64/b to $68/b range with the short-term risk skewed to the downside in our opinion.
Speculators added fresh dollar longs for a second week up until Feb 19. Against nine IMM currency futures the gross-long rose by $2.6 billion to $24bn. Selling of EURUSD was the main contributor as the net-short reached a 2-year high. In USDJPY shorts were added again for the first time in nine weeks. Despite toying with recent highs the dollar long was still some 25% below the December peak at $32 billion.
Bonds and stock index futures
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.
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)