COT: Heavy selling of commodities, buying of dollars COT: Heavy selling of commodities, buying of dollars COT: Heavy selling of commodities, buying of dollars

COT: Heavy selling of commodities, buying of dollars

Commodities 5 minutes to read
Ole Hansen

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.


The COT reports will be up to date from next week when we can report on data released on March 8 that covers the week to March 5. 

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.

Commodities

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.
The delayed reports covering US-traded commodities compiled by the CFTC showed another week of strong selling in the week to February 19. Selling was particularly strong in WTI crude oil, natural gas and not least grains. The gold long, meanwhile, reached a 10-month high ahead of its failed attempt to break $1,350/oz. The emerging rally in platinum caught hedge funds off guard as the short-covering had only just begun when it broke higher. 
Forex

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

In bonds the standoff between asset managers being long and leveraged traders, such as hedge funds and CTAs (commodity trading advisers) being short, continued. The latter held very elevated short positions in two-year (Ticker: ZTM9), 10-year maturities (ZNM9) and ultra long term bonds (UBM9).
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.
Disclaimer

The Saxo 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 is not intended to and does not change or expand on this. 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 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 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 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 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 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-hk/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo or its affiliates.

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo Capital Markets HK Limited holds a Type 1 Regulated Activity (Dealing in securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged foreign exchange trading); Type 4 Regulated Activity (Advising on securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong

By clicking on certain links on this site, you are aware and agree to leave the website of Saxo Capital Markets, proceed on to the linked site managed by Saxo Group and where you will be subject to the terms of that linked site.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

Please note that the information on this site and any product and services we offer are not targeted at investors residing in the United States and Japan, and are not intended for distribution to, or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. Please click here to view our full disclaimer.