COT: Natural gas bulls stay strong amidst broad retreat

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.