COT: Natural gas bulls stay strong amidst broad retreat

COT: Natural gas bulls stay strong amidst broad retreat

Commodities 7 minutes to read

Ole Hansen

Head of Commodity Strategy

Summary: Speculators slashed bullish commodity bets by 19% to 771,000 lots, an eight-week low, in the week to November 13 with natural gas the only major exception.

Saxo Bank publishes two weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.

To download your copy of the Commitment of Traders: Commodities report for the week ending November 13, click here.

Speculators responded to the sea of red price action in the week to November 13 by cutting bullish commodity bets by 19% to 771,000 lots, an eight-week low. All sectors took a hit with net-selling in 20 out of the 26 major commodity futures tracked in this update.

Natural gas was the only major exception with the biggest reductions seen in Brent, gold, silver, soybean complex and sugar.

Weeks of crude oil selling turned into a rout last Tuesday when both WTI and Brent dropped by close to 7%. The slump triggered a 54,000-lot reduction in the combined net-long to just 380,000 lots, the lowest since June 2017.

The reduction was driven by long-liquidation in Brent (-32,000) and short-selling in WTI (+10,000). From the record levels reached during Q1, leveraged funds have now cut bullish bets in WTI by 344,000 lots (69%) and Brent by 418,000 lots (66%). The gross-long, meanwhile, has dropped to the lowest since September 2015 while the gross-short has reached a 13-month high.

The 15% rally in natural gas during the reporting week helped trigger a 17% increase in the net-long across four Henry Hub-deliverable futures and swap contracts to 313,000 lots. This, the biggest bet on rising gas prices since February, was also the highest reading so early in the peak demand season for at least 10 years.

Gold and silver were both sold as they hurtled back towards support in response to a stronger dollar and rising PPI. The combination of an 89% increase in the net-short and the failure to break below $1,200/oz helped support the bounce which saw gold finish the week at at $1,223/oz.

The same goes for silver where the break but subsequent failed attempt below $13.95/oz, the September low, helped trigger a 91% jump in the net-short.

Grains with the exception of wheat was sold but overall the sector has provided little in terms of direction for several weeks now.

Soybeans have struggled to break above $9/bu and CBOT wheat holds onto support at $5/bu while corn has stayed rangebound between $3.6 and $3.8/bu.

A relative quiet week in softs with the exception of the 49% reduction in the sugar net-long and a cut in the cotton net-long to a 15-month low.

Quarterly Outlook Q4 2023

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