COMMODITIES 7 minutes to read

COT: Natural gas bulls stay strong amidst broad retreat

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.
Enlarge
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.
Enlarge
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.  
Enlarge
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. 
Enlarge
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. 
Enlarge
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.
Enlarge

You can access both of our platforms from a single Saxo account.

Disclaimer

The Saxo Bank 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 Bank 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 Bank 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 Bank 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 Bank 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 Bank 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/legal/disclaimer/saxo-disclaimer)