COT: Energy bets reduced again as production rise weighs

Ole Hansen

Head of Commodity Strategy, Saxo Bank Group
Ole Hansen joined Saxo in 2008 and has been Head of Commodity Strategy since 2010. He focuses on delivering strategies and analyses of the global commodity markets defined by fundamentals, market sentiment and technical developments.

To download your copy of the Commitment of Traders: Commodities report for the week ending June 5, click here.

Hedge funds cut bullish bets across 24 major commodities futures by 7% to 1.85 million lots in the week to June 5. The reduction was driven by continued selling across oil and fuels together with aggressive long-liquidation in soybeans, corn and cocoa. 

Buyers were most noticeable in HG Copper (17-week high) and sugar where the net-short was cut to a 21-week low.

 ᅟᅟ

Increased political meddling with oil prices together with multiple uncertainties ahead of potential contentious meetings in Vienna on June 22 and 23 helped trigger a seventh weekly reduction in bullish crude oil bets. This the longest losing streak since 2013 saw both long and short positions reduced; the market is likely to remain rangebound ahead of Opec and non-Opec meetings which could trigger a major market reaction.

ᅟᅟ

In WTI the net-long was cut by 3.3% to 313,000 lots, the lowest since last October. This as the discount to Brent stayed elevated due to the lack of midstream capacity to transport rising oil production from shale regions into the Gulf Coast. Net-longs in gasoline (RBOB) and diesel (ULSD) were also cut.

ᅟᅟ

We saw a relatively quiet week in metals with gold struggling to break away from $1,300/oz ahead of the near-certain US rate hike on June 13. Silver showed signs of life with the XAUXAG ratio hitting a four months low. The net-long at just 4.3k lots has left plenty of space for additional buying should the technical and/or fundamental outlook (Industrial metals rally) continue to improve.

ᅟᅟ

In HG Copper, strike threats to supplies from the world’s largest mine helped support a 63% increase in the net-long to 49,000 lots. With a 5% share of global output, the Escondida mine in Chile can on its own change global copper supply dynamics.

ᅟᅟ

With the exception of wheat, funds turned sellers of corn and the soybean complex. The sector saw at 140,000 lots net reduction, not least due to a 89,000-lot reduction in the corn net-long. Tariffs speculation took its toll on soybean bulls while very strong readings on early growing conditions has seen December corn lose almost 8% during the past two weeks.  

ᅟᅟ

Softs were mixed with continued sugar buying taking the net-short to a 21-week low while in cocoa a 21% correction from the April 26 peak finally attracted some selling after bulls had stubbornly been holding onto an elevated net-long.

ᅟᅟ

Access both platforms from your single Saxo account.

Disclaimer

Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice or a personal recommendation and does not take into consideration your objectives, financial situation and needs. Saxo Capital Markets UK Limited will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information. We assume no liability for errors, inaccuracies or omissions contained within these materials.

It is important that you understand that with investments, your capital is at risk. We offer leveraged products which carry risk and can result in losses that exceed deposits. 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. 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 here.

Additional Key Information Documents are available in our trading platform.

Saxo Capital Markets UK 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

Please read our full disclaimer - https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer