The purchase of crude oil was extended to a sixth week, with the WTI and Brent net long rising 22,000 lots to a 12-week high of 649,000 lots. Diesel (NY Harbor ULSD) jumped 48,000 lots to a three-year high, while natural gas continued to reduce length, despite its price rising 7.3%.
The Latest from Our Daily Market Quick Take: Crude Oil started the week on strong foundations as the global power crisis continues to raise expectations for higher demand for gas-to-oil switchovers at a time when OPEC + is doing its humble Maintains pace of monthly oil production. Saudi Aramco estimates that the gas shortage has already increased the demand for oil by another 0.5 million barrels / day.
China’s coal futures rose 8% overnight after torrential rains and landslides stalled some production at mines in Shanxi province, the country’s strongest producing region, further supporting global fuel prices, including crude oil became. Monthly oil market reports are available this week, starting with OPEC on Wednesday and followed by the IEA on Thursday. With WTI already trading at a seven-year high, Brent could now target the 2018 high of $ 86.74.
Hedge funds tried again to trade precious metals long, with gold net long increasing 61% to 67.8k lots and silver long increasing 1,000 to 4.6k lots. In general, exposure to both metals remains weak as the two metals are currently struggling to rally during times of price support only to fall back on negative price news. Even after many months of sideways trading, copper remains an underserved metal, while the two short-sold metals platinum and palladium have seen little change.
Speculators were selling soybeans again, with net longs dropping 9.9,000 lots to 49,5,000, a 14-month low, and last year the net long is now down 80%. Soybean oil, meanwhile, attracted buying interest because of its fuel compound. Small purchases of corn while the CBOT wheat position returned to a net long position, a trend seen four times over the past year and a reflection of speculators struggling to reach consensus on this important crop.
At Softs, cocoa rose 226% to 31,000 lots long after the price rose 8%. Cotton’s 9% rally to a new multi-year high supported an increase of 2% to 96.7 thousand lots, the highest level since May 2018. Net coffee purchases continued despite negative price movements in the reporting week (+ 6%) to 45.6 thousand).
The dollar long versus ten IMM currency futures and the dollar index rose 43% or USD 7.7 billion to USD 25.6 billion and is now the largest since June 2019. The greenback was bought against all currency futures except JPY , and speculators now hold total net short pairs other than NZD. Sales were concentrated on EUR (23.2k), with speculators selling shorts for the first time since last spring. However, at 22,000 lots, the short remains well above the 114,000 short lots seen during the early stages of the Covid-19 panic in February last year.
Interestingly, the aggressive dollar buying took place during a week that the Bloomberg Dollar Index was trading unchanged, with the weakness in the EUR being offset by the strength of all the other major crosses, particularly the GBP, CAD and AUD.