Crude and gold positions reduced - TDS

According to the latest CFTC Weekly Report of commodities, WTI crude specs continued to reduce exposure last week as the market digests the impact of a potential OPEC+ supply response.

Key Quotes

“A surging Brent-WTI spread amid offtake issues and news that the US Administration had covertly requested that the Cartel increase its production also added pressure on the black gold. This all culminated in money managers additionally reducing longs, but shorts also took the opportunity to cover their bets. Some relief was provided later in the week as a bearish EIA inventory report was offset by news that a large Venezuelan producer could declare force majeure on some shipments.”

“Gold specs have returned to reducing their position this week, following the recent trend of lightening exposure into an FOMC meeting. Indeed, stronger jobs and wages data, along with unemployment down to 3.8%, helped solidify Fed expectations. On the other hand, 10yr rates falling back below 3% amid European political drama, and the recent easing of dollar strength have prevented material weakness. Price action will likely remain muted/ slightly weaker heading into the meeting, but a "dovish hike" and talk of an inflation overshoot could be the catalyst needed to reignite spec interest.”

“Last week, money managers put aside their fears of a brewing trade war and increased their copper length ahead of high-stakes labor negotiations in Chile. Considering that a 44 day strike at the world's largest mine last year provided the catalyst needed for a robust rally, money managers added to their longs and aggressively covered shorts, prompting prices to break $7,100. The red beast continued to surge to cycle-highs, and reports that a single participant now holds 40-49% of the LME exchange warrants suggests that money manager exposure could still be higher next week as shorts cover.”