COT: Oil at three-year high triggers continued fund selling COT: Oil at three-year high triggers continued fund selling COT: Oil at three-year high triggers continued fund selling

COT: Oil at three-year high triggers continued fund selling

Ole Hansen

Head of Commodity Strategy

Download your copy of the latest Commitment of Traders: Commodities report here.

Hedge funds cut bullish commodities bets for a third week as the stronger dollar created headwinds for metals while surging crude oil prices continued to attract profit-taking. Staying with energy, demand for oil products continued to rise while natural gas was cut by one-quarter. 

Grains were mixed with soybeans selling being more than offset by strong pre-WASDE buying of corn and wheat. 

While crude oil rallied hard on the back of President Trump's decision to leave the 2015 nuclear agreement, hedge funds took to opportunity to reduce bullish bets for a third consecutive week. During this time the combined net-long (using four oil contracts on CME and ICE) has dropped by 88,000 lots to 1 million, an eight-week low.  

Demand for products, however, continued with the net-longs in gas oil, gasoline, and diesel all rising.

Gold and silver put up a fight against the stronger dollar with both managing to hold onto key support at $1,300/oz and $16/oz. respectively. Despite a small amount of net-buying in gold, the gross-long nevertheless dropped to just 118,000 lots, a 26-month low. 

On that basis funds have now been left unprepared for a potential move higher with the technical focus on $1,326/oz, the 38.2% retracement of the April to May sell-off. 

Three weeks of copper buying came to a halt as the stronger dollar and US-China trade impasse weigh on both sentiment and prices. 

China trade jitters resulting in less demand for US soybeans, meanwhile, helped trigger the largest weekly sell-off since December. Funds flipped their position in wheat back to a net-long but it is unlikely to have survived the week. This after selling pressure mounted following Thursday’s WASDE report which showed a surprise rise in US wheat production despite the poor condition of winter wheat. 

In soft commodities the elevated short positions in both sugar and coffee continued to be reduced while cocoa buyers paused following 15 consecutive weeks of buying.

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research 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. To the extent that any content is construed as investment research, you must note and accept that the 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 under relevant laws.

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)

Saxo Markets
40 Bank Street, 26th floor
E14 5DA
London
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo Markets is a registered Trading Name of Saxo Capital Markets UK Ltd (‘SCML’). SCML is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo Markets assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.

©   since 1992