COT: Brent bought; Awaiting data from reopened CFTC

In the week to January 22 money managers increased bullish bets on Brent crude oil by 30,029 lots to 202,934 lots, a ten-week high. The increase was the biggest weekly addition in six months and since reaching a 3-year low on December 4 the net-long has now increased by 66,000 lots. However, once again we find that most of the increase from the low has been driven by short-covering (51k) while only 15k of new longs were added.

This highlights the continued hesitancy with regards to the prospect for further upside in crude oil. Not least considering the macroeconomic outlook which remains clouded with uncertainties from the US to Europe and China. 

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.