BCO/WTI HEAVY SHORT Speculators cut oil long to pre-covid loWS
Weekly Commitment of Traders update highlights future positions and changes made by hedge funds and other speculators across commodities and forex during the week to August 9. A relatively quiet week where a continued improvement in risk appetite drove stocks higher while softening the dollar. Some commodity positions, with crude oil the major exceptions, showed signs of having reached a trough following weeks of heavy selling
his summary highlights futures positions and changes made by hedge funds across commodities and forex during the week to August 9. A relatively quiet summer holiday impacted week where stocks traded higher ahead of last week’s CPI and PPI print after better than expected economic data helped reduce US recession fears while the market was looking for inflation to roll over. The dollar traded a tad softer, bond yields firmed up while commodities showed signs of having reached a trough following weeks of heavy selling.
Adviser To Iranian Negotiating Delegation: The Chances Of Reaching A Nuclear Agreement Are Very Great
ajel.sa/
Commodities
Hedge funds were net buyers for a second week with demand concentrated in metals and agriculture while the energy sector saw continued selling. Overall the net long across 24 major commodity futures rose for a second week after recently hitting a two-year low. Buying was concentrated in gold, platinum, corn and livestock with crude oil and wheat being to most notable contracts seeing net selling.
Energy: Speculators responded to continued crude oil weakness by cutting bullish bets in WTI and Brent crude by a combined 14% to a pre-Covid low at 304.5k lots. The reductions were primarily driven by long liquidation in both contracts following a demand fear driven breakdown in prices. Gas oil and gasoline longs were also reduced.
Metals: Buying of metals extended to a second week led by gold which saw a 90% jump in the net long to 58.2k lots. Overall, net short positions were maintained in silver, platinum and copper with the latter seing a small amount of fresh selling due to profit taking on recently established longs.
Agriculture: Grains were mixed with corn and soybeans seeing continued buying ahead of Friday's WASDE report while the CBOT corn net short jumped 36% to 20k lotsand the Kansas net long was cut to a two-year low. The total grain long rose for second week having stabilised around 300k lots having collapse from a near record 800k lot on April 22.
Soft commodities saw elevated short positions in sugar and cocoa being maintained with price gains in coffee and not least cotton supporting a small increase in their respective net longs. This before Friday's surge in cotton which left it up 13% on the week after the US Department of Agriculture slashed the US crop forecast by 19% to a 12-year low. Driven by a high level of abandonment of fields in the drought-stricken Southwest.
Forex
In the week to August 9 when the dollar traded close to unchanged against a basket of major currencies, speculators increased to three the number of weeks of continued dollar selling. The pace of selling even accelerated to the highest since January after the gross long against ten IMM futures and the Dollar Index was slashed by 20% to $17.4 billion, a nine week low. Most notable selling of the greenback was seen against GBP and JPY followed by EUR and CHF. The Japanese yen, under pressure for months as yield differentials to the dollar widened saw its net short being cut by 22% to a 17-month low.
MY WTI BCO STRATEY:
HEAVY SHORT SELLING
TARET:.... read in my member blog
his summary highlights futures positions and changes made by hedge funds across commodities and forex during the week to August 9. A relatively quiet summer holiday impacted week where stocks traded higher ahead of last week’s CPI and PPI print after better than expected economic data helped reduce US recession fears while the market was looking for inflation to roll over. The dollar traded a tad softer, bond yields firmed up while commodities showed signs of having reached a trough following weeks of heavy selling.
Adviser To Iranian Negotiating Delegation: The Chances Of Reaching A Nuclear Agreement Are Very Great
ajel.sa/
Commodities
Hedge funds were net buyers for a second week with demand concentrated in metals and agriculture while the energy sector saw continued selling. Overall the net long across 24 major commodity futures rose for a second week after recently hitting a two-year low. Buying was concentrated in gold, platinum, corn and livestock with crude oil and wheat being to most notable contracts seeing net selling.
Energy: Speculators responded to continued crude oil weakness by cutting bullish bets in WTI and Brent crude by a combined 14% to a pre-Covid low at 304.5k lots. The reductions were primarily driven by long liquidation in both contracts following a demand fear driven breakdown in prices. Gas oil and gasoline longs were also reduced.
Metals: Buying of metals extended to a second week led by gold which saw a 90% jump in the net long to 58.2k lots. Overall, net short positions were maintained in silver, platinum and copper with the latter seing a small amount of fresh selling due to profit taking on recently established longs.
Agriculture: Grains were mixed with corn and soybeans seeing continued buying ahead of Friday's WASDE report while the CBOT corn net short jumped 36% to 20k lotsand the Kansas net long was cut to a two-year low. The total grain long rose for second week having stabilised around 300k lots having collapse from a near record 800k lot on April 22.
Soft commodities saw elevated short positions in sugar and cocoa being maintained with price gains in coffee and not least cotton supporting a small increase in their respective net longs. This before Friday's surge in cotton which left it up 13% on the week after the US Department of Agriculture slashed the US crop forecast by 19% to a 12-year low. Driven by a high level of abandonment of fields in the drought-stricken Southwest.
Forex
In the week to August 9 when the dollar traded close to unchanged against a basket of major currencies, speculators increased to three the number of weeks of continued dollar selling. The pace of selling even accelerated to the highest since January after the gross long against ten IMM futures and the Dollar Index was slashed by 20% to $17.4 billion, a nine week low. Most notable selling of the greenback was seen against GBP and JPY followed by EUR and CHF. The Japanese yen, under pressure for months as yield differentials to the dollar widened saw its net short being cut by 22% to a 17-month low.
MY WTI BCO STRATEY:
HEAVY SHORT SELLING
TARET:.... read in my member blog
Comment:
Oil Soars As U.S. Job Market Stays Strong
traders bet on a rebound after the recent sell-off
WTI oil moved above $71.00 as traders reacted to the Non Farm Payrolls report.
Brent oil settled above $75.00
WTI oil rallied as recession fears eased after the release of Non Farm Payrolls report. Traders used the recent sell-off as an opportunity to build long positions in WTI oil.
If WTI oil climbs above the $71.70 level, it will head towards the resistance at $72.70. A move above $72.70 will push WTI oil towards the $74.00 level.
R1:$71.70 – R2:$72.70 – R3:$74.00
S1:$70.30 – S2:$69.20 – S3:$68.00
Brent oil has also managed to gain strong upside momentum in today’s trading session as risk appetite increased.
If Brent oil moves above the $75.50 level, it will head towards the resistance at $76.25. A move above this level will push Brent oil towards the $77.50 level.
R1:$75.50 – R2:$76.25 – R3:$77.50
S1:$74.60 – S2:$73.00 – S3:$71.70
Crude oil markets have fallen a bit significantly during the trading week, only to turn around and find plenty of buyers willing to step in and trying to pick the market back up. By doing so, the market continues to see extreme volatility.
WTI Crude Oil Weekly Technical Analysis
The West Texas Intermediate Crude Oil market fell rather hard during the trading week, as we continue to see a lot of negativity around the idea of global demand. However, the $65 level offered enough support to turn things back around, and it now looks as if we may be trying to find the bottom of a summer range.
This does make a certain amount of sense, as the market tends to find some type of area that it wants to trade in during the “summer driving season” in the United States. If we were to break down below the bottom of the candlestick though, that would lead to even further losses, and would show that the economy is coming undone completely. On the upside, the 50-Week EMA sits right around $81.65, and that’s somewhere near the top of this overall consolidation area.
Brent Crude Oil Weekly Technical Analysis
The Brent market also fell rather hard, breaking below the $70 level at one point during the week. However, we have turned around quite drastically to support that area, and now it looks like Brent is finding its own range as well. The 50-Week EMA sits near the $86.50 level, and is offering a significant amount of resistance. On the other hand, if we were to break down below the tale of the candlestick for this week, that would be a very negative turn of events and could send this market down to the $60 level.
Again, both grades of oil are going to be paying close attention to the global economy, and the turnaround that we had seen late in the week was a little bit suspicious, as if somebody was stepping in and trying to support the market.
traders bet on a rebound after the recent sell-off
WTI oil moved above $71.00 as traders reacted to the Non Farm Payrolls report.
Brent oil settled above $75.00
WTI oil rallied as recession fears eased after the release of Non Farm Payrolls report. Traders used the recent sell-off as an opportunity to build long positions in WTI oil.
If WTI oil climbs above the $71.70 level, it will head towards the resistance at $72.70. A move above $72.70 will push WTI oil towards the $74.00 level.
R1:$71.70 – R2:$72.70 – R3:$74.00
S1:$70.30 – S2:$69.20 – S3:$68.00
Brent oil has also managed to gain strong upside momentum in today’s trading session as risk appetite increased.
If Brent oil moves above the $75.50 level, it will head towards the resistance at $76.25. A move above this level will push Brent oil towards the $77.50 level.
R1:$75.50 – R2:$76.25 – R3:$77.50
S1:$74.60 – S2:$73.00 – S3:$71.70
Crude oil markets have fallen a bit significantly during the trading week, only to turn around and find plenty of buyers willing to step in and trying to pick the market back up. By doing so, the market continues to see extreme volatility.
WTI Crude Oil Weekly Technical Analysis
The West Texas Intermediate Crude Oil market fell rather hard during the trading week, as we continue to see a lot of negativity around the idea of global demand. However, the $65 level offered enough support to turn things back around, and it now looks as if we may be trying to find the bottom of a summer range.
This does make a certain amount of sense, as the market tends to find some type of area that it wants to trade in during the “summer driving season” in the United States. If we were to break down below the bottom of the candlestick though, that would lead to even further losses, and would show that the economy is coming undone completely. On the upside, the 50-Week EMA sits right around $81.65, and that’s somewhere near the top of this overall consolidation area.
Brent Crude Oil Weekly Technical Analysis
The Brent market also fell rather hard, breaking below the $70 level at one point during the week. However, we have turned around quite drastically to support that area, and now it looks like Brent is finding its own range as well. The 50-Week EMA sits near the $86.50 level, and is offering a significant amount of resistance. On the other hand, if we were to break down below the tale of the candlestick for this week, that would be a very negative turn of events and could send this market down to the $60 level.
Again, both grades of oil are going to be paying close attention to the global economy, and the turnaround that we had seen late in the week was a little bit suspicious, as if somebody was stepping in and trying to support the market.
Comment:
Week Ahead: US CPI Report May Rock These 3 Markets
Even as anticipation mounts ahead of the US jobs data due later today, investors may be bracing for more volatility in the week ahead thanks to another round of risk events.
Economic Calendar for Next Week
All eyes will be on the incoming US inflation data as well as speeches from financial heavyweights and other risk events which could spark some fresh action across markets.
Monday, May 8
UK bank holiday honouring Charles III coronation
EUR: Germany industrial production, ECB Chief Economist Philip Lane speech
Tuesday, May 9
CHN: China trade, money supply
AUD: Australia consumer confidence
EUR: ECB Chief Economic Philip Lane speech (IMF)
USD: Fed New York President John Williams speech
US President Joe Biden debt ceiling talks
Wednesday, May 10
EUR: Germany April CPI (final)
USD: US April CPI
Thursday, May 11
CNH: China PPI, CPI
GBP: UK BOE rate decision & press conference
USD: US PPI, initial jobless claims
G7 finance ministers meet in Japan
Friday, May 12
GBP: UK Industrial production, Bank of England Chief Economist Huw Pill speech
USD: University of Michigan consumer sentiment, Fed speeches
The April US consumer price index (CPI) report published on Wednesday 10th May will be exactly one week after the Federal Reserve raised rates and signalled a pause in further increases.
Given how Fed Chair Jerome Powell has left the door open to further tightening if incoming economic data warrants, this could add more spice to the report.
CPI Forecasts
Markets are forecasting:
CPI year-on-year (April 2023 vs. April 2022) to remain steady at 5.0%.
Core CPI year-on-year to cool 5.4% from the 5.6% in the prior month.
CPI month-on-month (April 2023 vs March 2023) to rise 0.4% from 0.1% in the prior month.
Core CPI month-on-month to cool 0.3% from the 0.4% in the prior month.
Ultimately, further evidence of inflation slowing down could reinforce expectations around the Federal Reserve pausing and eventually cutting interest rates. Should inflation remain sticky, this could rekindle bets around the Fed leaving interest rates higher for longer.
Expectations are rising over the Federal Reserve cutting interest rates with the chance of a 25-basis point cut in July currently priced at 53%, according to Fed funds futures! It will be interesting to see how the incoming inflation data shapes market expectations around the central bank’s next move.
How Might the Markets React to the CPI Report?
With all of the above discussed, here’s how these 3 assets could react to the US CPI report
USD Index
The past few months have been rough and rocky for the dollar as investors weighed the prospects of the Federal Reserve pausing and then eventually cutting interest rates. More pain could be in store for the dollar if US inflation cools more than expected in April.
A soft inflation print may drag the USD Index toward the 100.72 level. Should prices experience a bearish breakout, this could open the doors toward 100.
A sticky inflation print could throw a lifeline to dollar bulls, propelling back above 101.50 with 102.34 acting as a key level of interest.
SPX500_m
After being trapped within a range for the past few weeks, could a breakout be on the horizon for the SPX500_m?
If the inflation numbers beat expectations, this may trigger a bearish breakout on the SPX500_m – taking prices below the 4050-support level.
Should the inflation numbers come in lower than market forecasts, SPX500_m bulls could be injected with renewed confidence as expectations intensify over the Fed ending its rate cycle. This could send the index back toward the 4180 resistance level and beyond.
Gold
It may be wise to fasten your seatbelts for potential volatility on gold due to its high sensitivity to inflation data and US interest rate expectations. The precious metal remains bullish on the daily charts despite prices pulling back from near-record highs.
A soft inflation report could sweeten appetite for the zero-yielding asset as bets rise over the Fed cutting rates in 2023. This development could push the metal back towards the 2023 high of $2063 with bulls eyeing $2070 and the all-time high at $2075.
A stronger-than-expected inflation number could drag gold prices back toward the psychological $2000 level.
Even as anticipation mounts ahead of the US jobs data due later today, investors may be bracing for more volatility in the week ahead thanks to another round of risk events.
Economic Calendar for Next Week
All eyes will be on the incoming US inflation data as well as speeches from financial heavyweights and other risk events which could spark some fresh action across markets.
Monday, May 8
UK bank holiday honouring Charles III coronation
EUR: Germany industrial production, ECB Chief Economist Philip Lane speech
Tuesday, May 9
CHN: China trade, money supply
AUD: Australia consumer confidence
EUR: ECB Chief Economic Philip Lane speech (IMF)
USD: Fed New York President John Williams speech
US President Joe Biden debt ceiling talks
Wednesday, May 10
EUR: Germany April CPI (final)
USD: US April CPI
Thursday, May 11
CNH: China PPI, CPI
GBP: UK BOE rate decision & press conference
USD: US PPI, initial jobless claims
G7 finance ministers meet in Japan
Friday, May 12
GBP: UK Industrial production, Bank of England Chief Economist Huw Pill speech
USD: University of Michigan consumer sentiment, Fed speeches
The April US consumer price index (CPI) report published on Wednesday 10th May will be exactly one week after the Federal Reserve raised rates and signalled a pause in further increases.
Given how Fed Chair Jerome Powell has left the door open to further tightening if incoming economic data warrants, this could add more spice to the report.
CPI Forecasts
Markets are forecasting:
CPI year-on-year (April 2023 vs. April 2022) to remain steady at 5.0%.
Core CPI year-on-year to cool 5.4% from the 5.6% in the prior month.
CPI month-on-month (April 2023 vs March 2023) to rise 0.4% from 0.1% in the prior month.
Core CPI month-on-month to cool 0.3% from the 0.4% in the prior month.
Ultimately, further evidence of inflation slowing down could reinforce expectations around the Federal Reserve pausing and eventually cutting interest rates. Should inflation remain sticky, this could rekindle bets around the Fed leaving interest rates higher for longer.
Expectations are rising over the Federal Reserve cutting interest rates with the chance of a 25-basis point cut in July currently priced at 53%, according to Fed funds futures! It will be interesting to see how the incoming inflation data shapes market expectations around the central bank’s next move.
How Might the Markets React to the CPI Report?
With all of the above discussed, here’s how these 3 assets could react to the US CPI report
USD Index
The past few months have been rough and rocky for the dollar as investors weighed the prospects of the Federal Reserve pausing and then eventually cutting interest rates. More pain could be in store for the dollar if US inflation cools more than expected in April.
A soft inflation print may drag the USD Index toward the 100.72 level. Should prices experience a bearish breakout, this could open the doors toward 100.
A sticky inflation print could throw a lifeline to dollar bulls, propelling back above 101.50 with 102.34 acting as a key level of interest.
SPX500_m
After being trapped within a range for the past few weeks, could a breakout be on the horizon for the SPX500_m?
If the inflation numbers beat expectations, this may trigger a bearish breakout on the SPX500_m – taking prices below the 4050-support level.
Should the inflation numbers come in lower than market forecasts, SPX500_m bulls could be injected with renewed confidence as expectations intensify over the Fed ending its rate cycle. This could send the index back toward the 4180 resistance level and beyond.
Gold
It may be wise to fasten your seatbelts for potential volatility on gold due to its high sensitivity to inflation data and US interest rate expectations. The precious metal remains bullish on the daily charts despite prices pulling back from near-record highs.
A soft inflation report could sweeten appetite for the zero-yielding asset as bets rise over the Fed cutting rates in 2023. This development could push the metal back towards the 2023 high of $2063 with bulls eyeing $2070 and the all-time high at $2075.
A stronger-than-expected inflation number could drag gold prices back toward the psychological $2000 level.
The upcoming week in the US will be dominated by news related to prices, including the inflation rate, producer prices, and export and import prices, as well as the Michigan consumer confidence CPI gauge. Additionally, CPI figures are scheduled to be released in China, Mexico, Brazil, India, and Russia. In the UK, the Q1 GDP growth data will be released, and investors will be closely monitoring the Bank of England's interest rate decision. Elsewhere, China is set to publish external trade data, and Australia will report on consumer and business confidence.