The commodities market starts the new week in October with attempts to stabilise. The Brent barrel had previously “sagged”, but is now returning to USD 92.40. It turns out that the entire positive effect of the OPEC+ decision to reduce black gold production quotas for November has now been exhausted.
This week, however, the focus of the commodities market will be on economic data from China. The main thing investors will be interested in is GDP figures for Q3, where a 3.5% y/y increase is expected, as well as figures for industrial production and retail sales. Forecasts look very weak due to the ongoing coronavirus restrictions.
Fresh data from Baker Hughes reflected an increase of 8 rigs in the US for the week up to 610. Oil production in the country stands at 12 million bpd, IEA expects to rise to 12.3 million bpd by end-December.
On the H4 Brent chart, an upside wave to 95.40 and a correction to 91.50 have been worked out. Today the market has started to form another upside wave to the level of 95.66. We expect its break up and continuation of the trend towards 99.55. The target is local. After it is reached, we will consider the probability of correction to the level of 95.66. Further – growth to 105,50. Technically, this scenario is confirmed by the MACD oscillator. Its signal line is above the zero mark and it is ready to continue growth to new highs.
On the H1 Brent chart, the corrective wave channel has been broken upwards and quotations are trading in a rising structure towards the 95.66 level. The target in the next growth wave is the first one. After it is broken down, a correction link to 93.85 is not ruled out. Further – growth to the level of 97.00 with the prospect of trend continuation to 99.55. The target is local. Technically, this scenario is also confirmed by theStochastic oscillator. Its signal line is above the 50 mark. We expect the continuation of growth towards 80.
Disclaimer
Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.
Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC).
The latest COT data is updated through Tuesday October 11th and shows a quick view of how large traders (for-profit speculators and commercial hedgers) were positioned in the futures markets.
Weekly Speculator Changes led by WTI Crude Oil and Heating Oil
COT energy market speculator bets were mixed this week as three out of the six energy markets we cover had higher positioning this week while the other three markets had lower contracts.
Leading the gains for energy markets was WTI Crude Oil (17,221 contracts) with Heating Oil (3,668 contracts) and Bloomberg Commodity Index (176 contracts) also showing positive weeks.
The energy markets leading the declines in speculator bets this week were Gasoline (-4,974 contracts) with Natural Gas (-3,007 contracts) and Brent Crude Oil (-2,068 contracts) also registering lower bets on the week.
Data Snapshot of Commodity Market Traders | Columns Legend
Oct-11-2022
OI
OI-Index
Spec-Net
Spec-Index
Com-Net
COM-Index
Smalls-Net
Smalls-Index
WTI Crude
1,499,498
3
259,220
13
-283,626
88
24,406
41
Gold
431,395
0
94,420
14
-103,728
87
9,308
3
Silver
125,623
0
7,389
22
-15,603
80
8,214
10
Copper
167,449
8
-15,899
24
16,903
80
-1,004
19
Palladium
6,890
5
-754
19
810
79
-56
41
Platinum
52,435
9
5,928
17
-8,690
85
2,762
5
Natural Gas
974,468
5
-162,103
30
130,099
72
32,004
56
Brent
163,113
11
-41,888
41
38,882
58
3,006
50
Heating Oil
275,262
25
19,423
71
-38,448
30
19,025
64
Soybeans
694,960
26
55,769
30
-30,614
77
-25,155
29
Corn
1,408,939
20
325,121
72
-258,225
35
-66,896
5
Coffee
188,198
3
40,534
73
-43,359
30
2,825
29
Sugar
687,209
0
101,115
57
-135,145
43
34,030
50
Wheat
307,901
9
-1,990
16
8,705
72
-6,715
76
Strength Scores led by Bloomberg Commodity Index & Heating Oil
Strength Scores (a normalized measure of Speculator positions over a 3-Year range, from 0 to 100 where above 80 is extreme bullish and below 20 is extreme bearish) show that the Bloomberg Commodity Index (78.3 percent) and Heating Oil (71.0 percent) lead the energy markets with scores above 50 percent.
On the downside, WTI Crude Oil (12.8 percent) and Gasoline (15.3 percent) come in at the lowest strength level currently and both are in extreme bearish levels (below 20 percent).
Strength Statistics: WTI Crude Oil (12.8 percent) vs WTI Crude Oil previous week (8.3 percent) Brent Crude Oil (40.9 percent) vs Brent Crude Oil previous week (44.4 percent) Natural Gas (29.9 percent) vs Natural Gas previous week (30.8 percent) Gasoline (15.3 percent) vs Gasoline previous week (20.3 percent) Heating Oil (71.0 percent) vs Heating Oil previous week (65.6 percent) Bloomberg Commodity Index (78.3 percent) vs Bloomberg Commodity Index previous week (77.6 percent)
Bloomberg Commodity Index leads the 6-Week Strength Trends
Strength Score Trends (or move index, calculates the 6-week changes in strength scores) show that the Bloomberg Commodity Index (18.9 percent) leads the past six weeks trends for energy this week. WTI Crude Oil (7.9 percent) is the only other positive mover in the latest trends data.
Natural Gas (-10.0 percent) leads the downside trend scores currently while the next markets with lower trend scores were Heating Oil (-8.5 percent) followed by Gasoline (-6.4 percent).
Strength Trend Statistics: WTI Crude Oil (7.9 percent) vs WTI Crude Oil previous week (-1.1 percent) Brent Crude Oil (-3.2 percent) vs Brent Crude Oil previous week (-5.7 percent) Natural Gas (-10.0 percent) vs Natural Gas previous week (-9.2 percent) Gasoline (-6.4 percent) vs Gasoline previous week (-4.5 percent) Heating Oil (-8.5 percent) vs Heating Oil previous week (-8.9 percent) Bloomberg Commodity Index (18.9 percent) vs Bloomberg Commodity Index previous week (18.6 percent)
Individual COT Energy Market Charts:
WTI Crude Oil Futures:
The WTI Crude Oil Futures large speculator standing this week resulted in a net position of 259,220 contracts in the data reported through Tuesday. This was a weekly rise of 17,221 contracts from the previous week which had a total of 241,999 net contracts.
This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 12.8 percent. The commercials are Bullish-Extreme with a score of 87.7 percent and the small traders (not shown in chart) are Bearish with a score of 40.7 percent.
WTI Crude Oil Futures Statistics
SPECULATORS
COMMERCIALS
SMALL TRADERS
– Percent of Open Interest Longs:
23.0
39.0
5.1
– Percent of Open Interest Shorts:
5.7
57.9
3.5
– Net Position:
259,220
-283,626
24,406
– Gross Longs:
345,258
584,609
76,359
– Gross Shorts:
86,038
868,235
51,953
– Long to Short Ratio:
4.0 to 1
0.7 to 1
1.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):
12.8
87.7
40.7
– Strength Index Reading (3 Year Range):
Bearish-Extreme
Bullish-Extreme
Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:
7.9
-7.4
-4.4
Brent Crude Oil Futures:
The Brent Crude Oil Futures large speculator standing this week resulted in a net position of -41,888 contracts in the data reported through Tuesday. This was a weekly decline of -2,068 contracts from the previous week which had a total of -39,820 net contracts.
This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 40.9 percent. The commercials are Bullish with a score of 57.9 percent and the small traders (not shown in chart) are Bearish with a score of 49.9 percent.
Brent Crude Oil Futures Statistics
SPECULATORS
COMMERCIALS
SMALL TRADERS
– Percent of Open Interest Longs:
17.5
51.4
4.9
– Percent of Open Interest Shorts:
43.2
27.6
3.1
– Net Position:
-41,888
38,882
3,006
– Gross Longs:
28,606
83,836
7,999
– Gross Shorts:
70,494
44,954
4,993
– Long to Short Ratio:
0.4 to 1
1.9 to 1
1.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):
40.9
57.9
49.9
– Strength Index Reading (3 Year Range):
Bearish
Bullish
Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:
-3.2
3.8
-5.7
Natural Gas Futures:
The Natural Gas Futures large speculator standing this week resulted in a net position of -162,103 contracts in the data reported through Tuesday. This was a weekly reduction of -3,007 contracts from the previous week which had a total of -159,096 net contracts.
This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 29.9 percent. The commercials are Bullish with a score of 71.9 percent and the small traders (not shown in chart) are Bullish with a score of 56.0 percent.
Natural Gas Futures Statistics
SPECULATORS
COMMERCIALS
SMALL TRADERS
– Percent of Open Interest Longs:
14.5
44.4
6.8
– Percent of Open Interest Shorts:
31.1
31.0
3.5
– Net Position:
-162,103
130,099
32,004
– Gross Longs:
140,917
432,665
65,929
– Gross Shorts:
303,020
302,566
33,925
– Long to Short Ratio:
0.5 to 1
1.4 to 1
1.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):
29.9
71.9
56.0
– Strength Index Reading (3 Year Range):
Bearish
Bullish
Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:
-10.0
11.9
-10.1
Gasoline Blendstock Futures:
The Gasoline Blendstock Futures large speculator standing this week resulted in a net position of 43,282 contracts in the data reported through Tuesday. This was a weekly decrease of -4,974 contracts from the previous week which had a total of 48,256 net contracts.
This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 15.3 percent. The commercials are Bullish-Extreme with a score of 84.7 percent and the small traders (not shown in chart) are Bearish with a score of 48.5 percent.
Nasdaq Mini Futures Statistics
SPECULATORS
COMMERCIALS
SMALL TRADERS
– Percent of Open Interest Longs:
28.6
53.0
7.7
– Percent of Open Interest Shorts:
11.8
71.9
5.6
– Net Position:
43,282
-48,643
5,361
– Gross Longs:
73,663
136,457
19,739
– Gross Shorts:
30,381
185,100
14,378
– Long to Short Ratio:
2.4 to 1
0.7 to 1
1.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):
15.3
84.7
48.5
– Strength Index Reading (3 Year Range):
Bearish-Extreme
Bullish-Extreme
Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:
-6.4
4.6
10.8
#2 Heating Oil NY-Harbor Futures:
The #2 Heating Oil NY-Harbor Futures large speculator standing this week resulted in a net position of 19,423 contracts in the data reported through Tuesday. This was a weekly rise of 3,668 contracts from the previous week which had a total of 15,755 net contracts.
This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 71.0 percent. The commercials are Bearish with a score of 30.3 percent and the small traders (not shown in chart) are Bullish with a score of 64.3 percent.
Heating Oil Futures Statistics
SPECULATORS
COMMERCIALS
SMALL TRADERS
– Percent of Open Interest Longs:
15.1
48.4
16.5
– Percent of Open Interest Shorts:
8.1
62.4
9.6
– Net Position:
19,423
-38,448
19,025
– Gross Longs:
41,620
133,301
45,373
– Gross Shorts:
22,197
171,749
26,348
– Long to Short Ratio:
1.9 to 1
0.8 to 1
1.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):
71.0
30.3
64.3
– Strength Index Reading (3 Year Range):
Bullish
Bearish
Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:
-8.5
5.7
1.6
Bloomberg Commodity Index Futures:
The Bloomberg Commodity Index Futures large speculator standing this week resulted in a net position of -7,623 contracts in the data reported through Tuesday. This was a weekly gain of 176 contracts from the previous week which had a total of -7,799 net contracts.
This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 78.3 percent. The commercials are Bearish with a score of 22.0 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 15.5 percent.
Bloomberg Index Futures Statistics
SPECULATORS
COMMERCIALS
SMALL TRADERS
– Percent of Open Interest Longs:
19.6
76.4
0.4
– Percent of Open Interest Shorts:
32.5
63.8
0.2
– Net Position:
-7,623
7,468
155
– Gross Longs:
11,559
45,105
253
– Gross Shorts:
19,182
37,637
98
– Long to Short Ratio:
0.6 to 1
1.2 to 1
2.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):
78.3
22.0
15.5
– Strength Index Reading (3 Year Range):
Bullish
Bearish
Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:
18.9
-18.4
-6.8
Article By InvestMacro – Receive our weekly COT Newsletter
*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.
The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.
The Crude Oil market on the D1 time frame was in an extended down trend until 26 September when a last lower bottom was recorded at 76.13. Bulls found the price attractive at those levels and demand started overcoming supply.
A closer look at the Momentum Oscillator reveals a positive divergence between points “a” and “b” when comparing the bottoms at 83.74 and 76.13. This could have alerted technical traders that the downtrend might be losing momentum.
After the lower bottom at 76.13, the price of Crude Oil broke through the 15 and 34 Simple Moving Averages and the Momentum Oscillator cut through the 100 base-line into bullish territory.
A higher top and possible critical resistance level formed on 10 Oct at 92.59. Bears are currently trying to drive the price lower but a possible higher bottom might be forming at a support level on 12 October at 85.17.
If the support level holds and the bulls manage to break through the critical resistance level at 92.59, then three possible price targets can be calculated from there. Applying the Fibonacci tool to the higher top at 92.59 and dragging it to the bottom of the support area at 85.17, the following targets may be considered. The first target may be likely at 97.18 (161%) and the second price target at 104.60 (261.8%). The third and final target may be expected at 116.60 (423.6%).
If the support level at 85.17 is broken, the bullish scenario is overturned and the scenario needs to be re-assessed.
As long as the supply remains constrained, the outlook for the Crude Oil market in the D1 time frame will remain bullish.
As we can see in the H4 chart, after breaking the 200-day Moving Average, Brent is trading above it to indicate a possible ascending tendency. However, there is divergence on the Relative Strength Index, which is a signal in favour of decline. In this case, the pair is expected to break 6/8 (93.75) and continue falling towards the support at 5/8 (90.62). However, this scenario may be cancelled if the price breaks the resistance at 7/8 (96.88) to the upside. After that, the instrument may move upwards to reach 8/8 (100.00).
In the M15 chart, the pair may break the downside line of the VoltyChannel indicator and, as a result, continue its decline.
S&P 500
As we can see in the H4 chart, the S&P 500 index is trading inside the “oversold area”. The Relative Strength Index has broken the descending trendline to the upside. In this case, the price is expected to break 0/8 (3750.0) and continue moving upwards to reach the resistance at 1/8 (3906.2). However, this scenario may no longer be valid if the price breaks the support at -1/8 (3593.8) to the downside. After that, the instrument may continue to fall towards -2/8 (3437.5).
In the M15 chart, the pair may break the upside line of the VoltyChannel indicator and, as a result, continue trading upwards.
Attention! Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
A new barrier to climate action is opening up in an obscure and secretive part of international trade law, which fossil fuel investors are using to sue countries if policy decisions go against them.
In this episode of The Conversation Weekly podcast, we speak to experts about the investor-state dispute settlement (ISDS) mechanism and how it works. Many are worried that these clauses in international trade deals could jeopardise global efforts to save the climate – costing countries billions of dollars in the process.
ISDS clauses were first introduced into international trade agreements in the post-colonial period. Most of these treaties were between a developed and a developing country. “It was really intended in the first instance to protect the interests of multinational companies from the global north when they were operating in these newly decolonised parts of the world,” explains Kyla Tienhaara, an expert in ISDS and environmental governance at Queen’s University in Ontario, Canada.
Yet Tienhaara says the use of ISDS has “morphed beyond all recognition” of the treaties’ original intentions, due to what she calls “creative lawyering” and the fact the system is stacked in favour of investors and against governments.
A looming concern is the chilling effect these clauses could have on countries’ decisions to phase out fossil fuels or take other action to protect the environment if investors decide to sue for compensation. In April, a summary report by the UN’s Intergovernmental Panel on Climate Change singled out ISDS clauses saying that they may “limit countries’ ability to adopt trade-related climate policies” and stick to their commitments under the 2015 Paris agreement.
In a recent study, Tienhaara and her colleagues estimated that countries could face up to US$340 billion in financial and legal risk from cancelling fossil fuel projects covered by ISDS clauses.
Some countries are more vulnerable than others because of the nature of the contracts they’ve entered into. Mozambique, with its large gas and coal reserves, is particularly so, explains Lea Di Salvatore, a PhD candidate at Nottingham University in the UK.
She analysed 29 of the country’s mega-projects for gas, coal and hydrocarbons and found that the vast majority are covered by ISDS clauses. This means that “the company can directly go and initiate an arbitration against Mozambique”, she says, if it feels a government policy has negatively affected its investment.
We hear what it’s like inside one of these arbitration rooms from Emilia Onyema, a professor of international commercial law at SOAS, University of London in the UK. “It’s a private process,” she explains. “The parties determine who the arbitrator is. They appoint the arbitrator. They pay the arbitrator. So they have more powers over the process than they would have in litigation.”
And we tell the story of one ISDS case launched against Italy by the British oil company, Rockhopper Exploration. In 2016, Italy banned oil drilling 12 nautical miles off its coast, which blocked Rockhopper’s exploration of the offshore Ombrina Mare field in the Adriatic Sea. Maria-Rita D’Orsogna, a US-based mathematician and leading campaigner against oil exploration in Abruzzo, explains what was at stake and what happened next.
Listen to the whole episode on The Conversation Weekly to find out about the fight back against ISDS, including moves to reform a big international trade treaty covering the fossil fuel industry and what countries are doing to limit their risk from ISDS climate arbitration.
This episode was produced by Gemma Ware and Mend Mariwany, with sound design by Eloise Stevens. The executive producer was Gemma Ware. Our theme music is by Neeta Sarl.
You can listen to “The Conversation Weekly” via any of the apps listed above, download it directly via our RSS feed, or find out how else to listen here.
Russia’s effort to conscript 300,000 reservists to counter Ukraine’s military advances in Kharkiv has drawn a lot of attention from military and political analysts. But there’s also a potential energy angle. Energy conflicts between Russia and Europe are escalating and likely could worsen as winter approaches.
One might assume that energy workers, who provide fuel and export revenue that Russia desperately needs, are too valuable to the war effort to be conscripted. So far, banking and information technology workers have received an official nod to stay in their jobs.
The situation for oil and gas workers is murkier, including swirling bits of Russian media disinformation about whether the sector will or won’t be targeted for mobilization. Either way, I expect Russia’s oil and gas operations to be destabilized by the next phase of the war.
The explosions in September 2022 that damaged the Nord Stream 1 and 2 gas pipelines from Russia to Europe, and that may have been sabotage, are just the latest developments in this complex and unstable arena. As an analyst of global energy policy, I expect that more energy cutoffs could be in the cards – either directly ordered by the Kremlin to escalate economic pressure on European governments or as a result of new sabotage, or even because shortages of specialized equipment and trained Russian manpower lead to accidents or stoppages.
Dwindling natural gas flows
Russia has significantly reduced natural gas shipments to Europe in an effort to pressure European nations who are siding with Ukraine. In May 2022, the state-owned energy company Gazprom closed a key pipeline that runs through Belarus and Poland.
In June, the company reduced shipments to Germany via the Nord Stream 1 pipeline, which has a capacity of 170 million cubic meters per day, to only 40 million cubic meters per day. A few months later, Gazprom announced that Nord Stream 1 needed repairs and shut it down completely. Now U.S. and European leaders charge that Russia deliberately damaged the pipeline to further disrupt European energy supplies. The timing of the pipeline explosion coincided with the start up of a major new natural gas pipeline from Norway to Poland.
Russia has very limited alternative export infrastructure that can move Siberian natural gas to other customers, like China, so most of the gas it would normally be selling to Europe cannot be shifted to other markets. Natural gas wells in Siberia may need to be taken out of production, or shut in, in energy-speak, which could free up workers for conscription.
European dependence on Russian oil and gas evolved over decades. Now, reducing it is posing hard choices for EU countries.
Restricting Russian oil profits
Russia’s call-up of reservists also includes workers from companies specifically focused on oil. This has led some seasoned analysts to question whether supply disruptions might spread to oil, either by accident or on purpose.
One potential trigger is the Dec. 5, 2022, deadline for the start of phase six of European Union energy sanctions against Russia. Confusion about the package of restrictions and how they will relate to a cap on what buyers will pay for Russian crude oil has muted market volatility so far. But when the measures go into effect, they could initiate a new spike in oil prices.
Under this sanctions package, Europe will completely stop buying seaborne Russian crude oil. This step isn’t as damaging as it sounds, since many buyers in Europe have already shifted to alternative oil sources.
Before Russia invaded Ukraine, it exported roughly 1.4 million barrels per day of crude oil to Europe by sea, divided between Black Sea and Baltic routes. In recent months, European purchases have fallen below 1 million barrels per day. But Russia has actually been able to increase total flows from Black Sea and Baltic ports by redirecting crude oil exports to China, India and Turkey.
Russia has limited access to tankers, insurance and other services associated with moving oil by ship. Until recently, it acquired such services mainly from Europe. The change means that customers like China, India and Turkey have to transfer some of their purchases of Russian oil at sea from Russian-owned or chartered ships to ships sailing under other nations’ flags, whose services might not be covered by the European bans. This process is common and not always illegal, but often is used to evade sanctions by obscuring where shipments from Russia are ending up.
To compensate for this costly process, Russia is discounting its exports by US$40 per barrel. Observers generally assume that whatever Russian crude oil European buyers relinquish this winter will gradually find alternative outlets.
Where is Russian oil going?
The U.S. and its European allies aim to discourage this increased outflow of Russian crude by further limiting Moscow’s access to maritime services, such as tanker chartering, insurance and pilots licensed and trained to handle oil tankers, for any crude oil exports to third parties outside of the G-7 who pay rates above the U.S.-EU price cap. In my view, it will be relatively easy to game this policy and obscure how much Russia’s customers are paying.
On Sept. 9, 2022, the U.S. Treasury Department’s Office of Foreign Assets Control issued new guidance for the Dec. 5 sanctions regime. The policy aims to limit the revenue Russia can earn from its oil while keeping it flowing. It requires that unless buyers of Russian oil can certify that oil cargoes were bought for reduced prices, they will be barred from obtaining European maritime services.
However, this new strategy seems to be failing even before it begins. Denmark is still making Danish pilots available to move tankers through its precarious straits, which are a vital conduit for shipments of Russian crude and refined products. Russia has also found oil tankers that aren’t subject to European oversight to move over a third of the volume that it needs transported, and it will likely obtain more.
Traders have been getting around these sorts of oil sanctions for decades. Tricks of the trade include blending banned oil into other kinds of oil, turning off ship transponders to avoid detection of ship-to-ship transfers, falsifying documentation and delivering oil into and then later out of major storage hubs in remote parts of the globe. This explains why markets have been sanguine about the looming European sanctions deadline.
One fuel at a time
But Russian President Vladimir Putin may have other ideas. Putin has already threatened a larger oil cutoff if the G-7 tries to impose its price cap, warning that Europe will be “as frozen as a wolf’s tail,” referencing a Russian fairy tale.
U.S. officials are counting on the idea that Russia won’t want to damage its oil fields by turning off the taps, which in some cases might create long-term field pressurization problems. In my view, this is poor logic for multiple reasons, including Putin’s proclivity to sacrifice Russia’s economic future for geopolitical goals.
Russia managed to easily throttle back oil production when the COVID-19 pandemic destroyed world oil demand temporarily in 2020, and cutoffs of Russian natural gas exports to Europe have already greatly compromised Gazprom’s commercial future. Such actions show that commercial considerations are not a high priority in the Kremlin’s calculus.
How much oil would come off the market if Putin escalates his energy war? It’s an open question. Global oil demand has fallen sharply in recent months amid high prices and recessionary pressures. The potential loss of 1 million barrels per day of Russian crude oil shipments to Europe is unlikely to jack the price of oil back up the way it did initially in February 2022, when demand was still robust.
Speculators are betting that Putin will want to keep oil flowing to everyone else. China’s Russian crude imports surged as high as 2 million barrels per day following the Ukraine invasion, and India and Turkey are buying significant quantities.
Refined products like diesel fuel are due for further EU sanctions in February 2023. Russia supplies close to 40% of Europe’s diesel fuel at present, so that remains a significant economic lever.
The EU appears to know it must kick dependence on Russian energy completely, but its protected, one-product-at-a-time approach keeps Putin potentially in the driver’s seat. In the U.S., local diesel fuel prices are highly influenced by competition for seaborne cargoes from European buyers. So U.S. East Coast importers could also be in for a bumpy winter.
This article has been updated to reflect conflicting reports about the draft status of Russian oil and gas workers.
OPEC+ will be holding an in-person meeting in Vienna today, and is set to announce a major decision that’s likely to reverberate across global oil markets.
Given the forward-looking nature of markets, oil benchmarks have climbed over the past week in anticipation of today’s keenly-awaited meeting.
Brent is now in sentinel mode, hovering above the psychologically-important $90/bbl line at the time of writing, but still remains in the downtrend that’s persisted since June.
Brent’s recent recovery have been based on the notion that the OPEC+ alliance would significantly tighten its oil taps in November, perhaps by as much as 2 million bpd, in order to shore up prices.
What is OPEC+?
OPEC+ is an alliance of 23 major oil-producing nations, with Saudi Arabia and Russia seen as its de facto leaders.
Their collective job is to determine how much of their oil supplies are sent out into the world, which in turn influences global prices such a Brent and US Crude.
Econs 101: Supply vs. Demand
Let’s revisit some basic Economics in order to understand how OPEC+’s upcoming decision will impact oil prices:
When supply is higher than demand = prices go down
When demand is higher than supply = prices go up
Note in the chart above how Brent has been dropping since June.
This is because of fears that global demand for oil is weakening amid a potential recession.
Lower demand (possible global recession) + Higher supply (OPEC+ restoring supplies; more on this below) = Brent prices falling.
The declines in oil prices have already prompted OPEC+ to sit up and act.
Earlier this month, the alliance had already imposed a symbolic 100k bpd supply reduction for October.
100,000 bpd pales in comparison against the 100,000,000 (100 million) barrels that the world uses per day. That’s just 0.1%
Even with such a token sum, that was already an early sign of a U-turn.
Recall how since July 2021, OPEC+ has been gradually raisingoutput, or more specifically, restoring output back to pre-pandemic levels.
Today, they could announce a sizeable lowering of its output starting in November.
The hope is that:
Elevated global demand + lower supplies = prices move back higher (so that OPEC+ members can continue earning higher revenue from those elevated global oil prices).
Here are 3 potential scenarios for markets to consider in light of the imminent OPEC+ decision:
OPEC+ announces a 2 million bpd cut
Such an announcement may lead to a knee-jerk spike in oil prices.
Potential immediate resistance for Brent:
$93.50 = 50-day simple moving average (SMA)
$95.11 = previous cycle high
Now this is where it gets tricky, cause the devil is in the details.
Such a massive headline figure also must meaningfully change that supply-demand equation (as above) for global markets.
Note that, under the previous campaign (since mid-2021) to restore output, OPEC+ members had already been struggling to reach their respective ramped-up output quotas.
Due to years of underinvestment and even political instability in some OPEC+ members, many countries couldn’t pump out as many barrels of oil as they said they were going to under the previous agreement.
Bloomberg estimates that gap between the output target vs. the actual output = 3.5 million bpd.
Hence, even if OPEC+ announces a 2 million bpd cut, it may just be perceived as empty words and may not be an actual cut in the real world.
It all boils down to how those 2 million bpd would filter down to each OPEC+ member’s actual output levels.
OPEC+ announces an output cut of 1 million bpd – 1.5 million bpd
Brent prices may just hold around current levels
OPEC+ announces an output cut that’s smaller than 1 million bpd
Such disappointing news may prompt Brent to unwind its recent gains.
Potential immediate support levels for Brent:
(previous cycle lows)
$86.88
$84.77
$82.53
Overall, OPEC+ has to forcefully demonstrate its desire to restore prices to market fundamentals in order to offer meaningful support for oil benchmarks, amid the wave of demand-destroying policy tightening by central banks around the world.
In order for oil prices to continue marching higher, the OPEC+ announcement today has to not just materially influence the global supply-demand equation, but the alliance also has to signal its willingness for more output cuts in the future.
Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC).
The latest COT data is updated through Tuesday September 27th and shows a quick view of how large traders (for-profit speculators and commercial hedgers) were positioned in the futures markets.
Weekly Speculator Changes led by Natural Gas and Bloomberg Commodity Index
The COT energy market speculator bets were lower this week as two out of the six energy markets we cover had higher positioning this week while the other four markets had lower contracts.
Leading the gains for energy markets was Natural Gas (3,587 contracts) with the Bloomberg Commodity Index (2,703 contracts) also showing a positive week.
The energy markets leading the declines in speculator bets this week was WTI Crude Oil (-13,798 contracts) with Brent Crude Oil (-3,354 contracts), Gasoline (-3,013 contracts) and Heating Oil (-2,683 contracts) also recording lower bets on the week.
Data Snapshot of Commodity Market Traders | Columns Legend
Sep-27-2022
OI
OI-Index
Spec-Net
Spec-Index
Com-Net
COM-Index
Smalls-Net
Smalls-Index
WTI Crude
1,504,991
3
226,080
4
-246,872
98
20,792
35
Gold
457,061
1
52,081
0
-62,138
100
10,057
1
Silver
129,000
0
758
15
-6,860
89
6,102
0
Copper
173,661
13
-27,756
16
28,884
86
-1,128
19
Palladium
6,080
1
-831
18
1,236
82
-405
20
Platinum
58,994
20
161
9
-2,525
93
2,364
0
Natural Gas
943,241
0
-152,124
33
121,135
69
30,989
54
Brent
167,444
14
-41,257
42
40,490
61
767
20
Heating Oil
290,265
31
11,414
59
-21,625
48
10,211
34
Soybeans
699,311
27
80,051
38
-50,206
71
-29,845
21
Corn
1,347,278
11
296,622
68
-229,436
39
-67,186
4
Coffee
185,149
1
44,680
77
-46,664
27
1,984
18
Sugar
710,887
2
48,601
47
-56,409
57
7,808
18
Wheat
290,771
2
2,735
23
4,675
66
-7,410
72
Strength Scores
Strength Scores (a normalized measure of Speculator positions over a 3-Year range, from 0 to 100 where above 80 is extreme bullish and below 20 is extreme bearish) showed that the Bloomberg Commodity Index (78.4 percent) and Heating Oil (59.2 percent) lead the energy markets currently. These are the only two markets that have scores above 50 percent or above the midpoint of the 3-year range.
On the downside, the WTI Crude Oil (4.1 percent) comes in at the lowest strength level and is followed by Gasoline at 16.1 percent. Both of these markets are currently in bearish extreme positions with scores below 20 percent.
Strength Statistics: WTI Crude Oil (4.1 percent) vs WTI Crude Oil previous week (7.7 percent) Brent Crude Oil (41.9 percent) vs Brent Crude Oil previous week (47.6 percent) Natural Gas (32.9 percent) vs Natural Gas previous week (31.8 percent) Gasoline (16.1 percent) vs Gasoline previous week (19.1 percent) Heating Oil (59.2 percent) vs Heating Oil previous week (63.2 percent) Bloomberg Commodity Index (78.4 percent) vs Bloomberg Commodity Index previous week (68.0 percent)
Strength Trends
Strength Score Trends (or move index, calculates the 6-week changes in strength scores) showed that the Bloomberg Commodity Index (20.2 percent) leads the past six weeks trends for energy this week. The only other positive mover in the latest trends data was WTI Crude Oil at 2.9 percent.
Heating Oil (-19.9 percent) leads the downside trend scores currently while the next market with lower trend scores was Natural Gas (-9.4 percent) followed by Brent Crude Oil (-8.8 percent).
Strength Trend Statistics: WTI Crude Oil (2.9 percent) vs WTI Crude Oil previous week (7.7 percent) Brent Crude Oil (-8.8 percent) vs Brent Crude Oil previous week (-6.2 percent) Natural Gas (-9.4 percent) vs Natural Gas previous week (-9.1 percent) Gasoline (-3.6 percent) vs Gasoline previous week (1.6 percent) Heating Oil (-19.9 percent) vs Heating Oil previous week (-15.3 percent) Bloomberg Commodity Index (20.2 percent) vs Bloomberg Commodity Index previous week (8.9 percent)
Individual COT Market Charts:
WTI Crude Oil Futures:
The WTI Crude Oil Futures large speculator standing this week reached a net position of 226,080 contracts in the data reported through Tuesday. This was a weekly fall of -13,798 contracts from the previous week which had a total of 239,878 net contracts.
This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 4.1 percent. The commercials are Bullish-Extreme with a score of 97.6 percent and the small traders (not shown in chart) are Bearish with a score of 34.7 percent.
WTI Crude Oil Futures Statistics
SPECULATORS
COMMERCIALS
SMALL TRADERS
– Percent of Open Interest Longs:
22.2
39.8
5.0
– Percent of Open Interest Shorts:
7.2
56.2
3.6
– Net Position:
226,080
-246,872
20,792
– Gross Longs:
333,933
598,428
75,054
– Gross Shorts:
107,853
845,300
54,262
– Long to Short Ratio:
3.1 to 1
0.7 to 1
1.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):
4.1
97.6
34.7
– Strength Index Reading (3 Year Range):
Bearish-Extreme
Bullish-Extreme
Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:
2.9
-2.0
-5.9
Brent Crude Oil Futures:
The Brent Crude Oil Futures large speculator standing this week reached a net position of -41,257 contracts in the data reported through Tuesday. This was a weekly decline of -3,354 contracts from the previous week which had a total of -37,903 net contracts.
This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 41.9 percent. The commercials are Bullish with a score of 60.6 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 19.6 percent.
Brent Crude Oil Futures Statistics
SPECULATORS
COMMERCIALS
SMALL TRADERS
– Percent of Open Interest Longs:
15.3
53.2
4.3
– Percent of Open Interest Shorts:
40.0
29.0
3.9
– Net Position:
-41,257
40,490
767
– Gross Longs:
25,696
89,127
7,236
– Gross Shorts:
66,953
48,637
6,469
– Long to Short Ratio:
0.4 to 1
1.8 to 1
1.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):
41.9
60.6
19.6
– Strength Index Reading (3 Year Range):
Bearish
Bullish
Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:
-8.8
10.3
-12.9
Natural Gas Futures:
The Natural Gas Futures large speculator standing this week reached a net position of -152,124 contracts in the data reported through Tuesday. This was a weekly lift of 3,587 contracts from the previous week which had a total of -155,711 net contracts.
This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 32.9 percent. The commercials are Bullish with a score of 69.1 percent and the small traders (not shown in chart) are Bullish with a score of 53.6 percent.
Natural Gas Futures Statistics
SPECULATORS
COMMERCIALS
SMALL TRADERS
– Percent of Open Interest Longs:
15.1
43.3
6.5
– Percent of Open Interest Shorts:
31.2
30.5
3.2
– Net Position:
-152,124
121,135
30,989
– Gross Longs:
142,021
408,871
61,287
– Gross Shorts:
294,145
287,736
30,298
– Long to Short Ratio:
0.5 to 1
1.4 to 1
2.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):
32.9
69.1
53.6
– Strength Index Reading (3 Year Range):
Bearish
Bullish
Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:
-9.4
12.1
-16.6
Gasoline Blendstock Futures:
The Gasoline Blendstock Futures large speculator standing this week reached a net position of 44,060 contracts in the data reported through Tuesday. This was a weekly lowering of -3,013 contracts from the previous week which had a total of 47,073 net contracts.
This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 16.1 percent. The commercials are Bullish-Extreme with a score of 86.4 percent and the small traders (not shown in chart) are Bearish with a score of 31.7 percent.
Nasdaq Mini Futures Statistics
SPECULATORS
COMMERCIALS
SMALL TRADERS
– Percent of Open Interest Longs:
32.9
46.8
7.6
– Percent of Open Interest Shorts:
14.5
66.4
6.4
– Net Position:
44,060
-46,904
2,844
– Gross Longs:
78,843
111,947
18,200
– Gross Shorts:
34,783
158,851
15,356
– Long to Short Ratio:
2.3 to 1
0.7 to 1
1.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):
16.1
86.4
31.7
– Strength Index Reading (3 Year Range):
Bearish-Extreme
Bullish-Extreme
Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:
-3.6
5.5
-14.1
#2 Heating Oil NY-Harbor Futures:
The #2 Heating Oil NY-Harbor Futures large speculator standing this week reached a net position of 11,414 contracts in the data reported through Tuesday. This was a weekly decline of -2,683 contracts from the previous week which had a total of 14,097 net contracts.
This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 59.2 percent. The commercials are Bearish with a score of 48.2 percent and the small traders (not shown in chart) are Bearish with a score of 33.7 percent.
Heating Oil Futures Statistics
SPECULATORS
COMMERCIALS
SMALL TRADERS
– Percent of Open Interest Longs:
13.6
53.3
13.2
– Percent of Open Interest Shorts:
9.7
60.8
9.7
– Net Position:
11,414
-21,625
10,211
– Gross Longs:
39,591
154,778
38,397
– Gross Shorts:
28,177
176,403
28,186
– Long to Short Ratio:
1.4 to 1
0.9 to 1
1.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):
59.2
48.2
33.7
– Strength Index Reading (3 Year Range):
Bullish
Bearish
Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:
-19.9
19.6
-16.9
Bloomberg Commodity Index Futures:
The Bloomberg Commodity Index Futures large speculator standing this week reached a net position of -7,614 contracts in the data reported through Tuesday. This was a weekly gain of 2,703 contracts from the previous week which had a total of -10,317 net contracts.
This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 78.4 percent. The commercials are Bearish with a score of 21.9 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 16.1 percent.
Bloomberg Index Futures Statistics
SPECULATORS
COMMERCIALS
SMALL TRADERS
– Percent of Open Interest Longs:
24.0
74.1
0.4
– Percent of Open Interest Shorts:
36.4
61.9
0.2
– Net Position:
-7,614
7,445
169
– Gross Longs:
14,652
45,267
271
– Gross Shorts:
22,266
37,822
102
– Long to Short Ratio:
0.7 to 1
1.2 to 1
2.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):
78.4
21.9
16.1
– Strength Index Reading (3 Year Range):
Bullish
Bearish
Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:
20.2
-19.8
-4.9
Article By InvestMacro – Receive our weekly COT Newsletter
*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.
The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.
Imagine a future where, despite efforts to reduce greenhouse gas emissions quickly, parts of the world have become unbearably hot. Some governments might decide to “geoengineer” the planet by spraying substances into the upper atmosphere to form fine reflective aerosols – a process known as stratospheric aerosol injection.
Theoretically, those tiny particles would reflect a little more sunlight back to space, dampening the effects of global warming. Some people envision it having the effect of a volcanic eruption, like Mount Pinatubo in 1991, which cooled the planet by about half a degree Celsius on average for many months. However, like that eruption, the effects could vary widely across the surface of the globe.
How quickly might you expect to notice your local temperatures falling? One year? Five years? Ten years?
What if your local temperatures seem to be going up?
As it turns out, that is exactly what could happen. While modeling studies show that stratospheric aerosol injection could stop global temperatures from increasing further, our research shows that temperatures locally or regionally might continue to increase over the following few years. This insight is essential for the general public and policymakers to understand so that climate policies are evaluated fairly and interpreted based on the best available science.
Why local temperatures might continue to rise
In an article published in the Proceedings of the National Academy of Sciences on Sept. 27, 2022, we explore how the effectiveness of stratospheric aerosol injection could be hidden by the natural variability of Earth’s climate.
Natural climate variability refers to variations in climate that are not driven by humans, such as chaotic, unpredictable interactions within and between the ocean, atmosphere, land and sea ice. One example of natural climate variability is the El Niño Southern Oscillationphenomena. During an El Niño year – or its opposite, La Niña – many parts of the world experience warmer or cooler conditions than they might otherwise. These are inescapable features of Earth’s climate system.
We looked at 10 climate model simulations that include stratospheric aerosol injection and analyzed the temperatures that people might experience over a 10-year period if enough aerosols were added to limit the rise in global temperatures to 1.5 degrees Celsius (2.7 F) above preindustrial levels, the U.N. Paris climate agreement goal.
We found that a substantial fraction of the Earth’s population could experience continued warming even as average temperatures decreased at a global scale, with as much as 55% still experiencing rising temperatures for a decade after stratospheric aerosol injection begins.
This could be true in parts of the largest and richest countries in the world, including the United States, China, India and parts of Europe. The very countries that have the ability to attempt stratospheric aerosol injection in the future could be those most likely to still see temperatures rise.
Consequences are still poorly understood
Many different types of solar radiation modification have been proposed, but most experts consider stratospheric aerosol injection to be both the most effective and least expensive approach.
The basic idea would be to produce tiny, reflective particles in part of the stratosphere between about 12 and 16 miles (20 and 25 kilometers) in altitude – which is above where airplanes typically fly. While some science fiction stories suggest that rockets might be used to do this, most experts think that modified aircraft would be required to distribute aerosols both high enough and consistently enough.
In 2021, the U.S. National Academies of Sciences, Engineering, and Medicine released a report on the topic of solar radiation modification, including stratospheric aerosol injection. The report was written by a committee of climate scientists, economists, lawyers and others. The group came to the conclusion that the U.S. should fund research on the topic. It recommended this in part because the consequences of solar radiation modification were still poorly understood.
This lack of understanding is quite a risk, since it remains unknown what might happen if the world pursues strategies like stratospheric aerosol injection, let alone if a specific country or organization decides to pursue these interventions by itself.
Pros and cons of solar geoengineering. The Economist via YouTube.
In our view, research into the potential consequences of stratospheric aerosol injection should include studies to examine potential changes in crop yields, shifts in global rainfall patterns or changes in critical regions of the Earth’s biosphere, like the Amazon rainforest. The fact is that we don’t know very well what would happen with stratospheric aerosol injection – which is why research on this topic is so critical.
Reducing emissions is fundamental to curb climate change
We want to be absolutely clear that we are not advocating for the actual use of stratospheric aerosol injection.
The most direct way to avoid the uncertainty of solar radiation modification strategies like stratospheric aerosol injection is to address the root cause of global warming. That, as documented by many scientific studies, will require the aggressive reduction of emissions of carbon dioxide, methane and other greenhouse gases into the atmosphere.
Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC).
The latest COT data is updated through Tuesday September 20th and shows a quick view of how large traders (for-profit speculators and commercial hedgers) were positioned in the futures markets.
WTI Crude Oil leads the Weekly Speculator Changes
The COT energy market speculator bets were a little higher this week as four out of the six energy markets we cover had higher positioning this week while the other two markets had lower contracts.
Leading the gains for energy markets was WTI Crude Oil (12,821 contracts) with Gasoline (1,481 contracts), Brent Crude Oil (1,120 contracts) and Bloomberg Commodity Index (117 contracts) also showing positive weeks.
The energy markets leading the declines in speculator bets this week were Natural Gas (-9,996 contracts) with Heating Oil (-1,967 contracts) also registering lower bets on the week.
Data Snapshot of Commodity Market Traders | Columns Legend
Sep-20-2022
OI
OI-Index
Spec-Net
Spec-Index
Com-Net
COM-Index
Smalls-Net
Smalls-Index
WTI Crude
1,481,545
1
239,878
8
-261,568
94
21,690
36
Gold
469,395
5
65,722
0
-75,428
100
9,706
0
Silver
132,107
0
-1,640
12
-5,629
90
7,269
4
Copper
163,058
4
-20,286
22
23,215
82
-2,929
8
Palladium
5,993
1
-1,081
17
1,261
82
-180
33
Platinum
62,900
27
2,390
12
-5,496
89
3,106
5
Natural Gas
960,236
1
-155,711
32
121,308
69
34,403
62
Brent
164,025
11
-37,903
48
36,732
54
1,171
25
Heating Oil
292,634
32
14,097
63
-25,941
44
11,844
39
Soybeans
656,310
18
84,773
39
-55,485
70
-29,288
22
Corn
1,330,841
9
305,677
69
-241,238
38
-64,439
6
Coffee
191,433
5
41,072
74
-42,998
30
1,926
17
Sugar
744,972
8
37,345
44
-35,860
61
-1,485
6
Wheat
285,567
0
-4,029
14
9,982
74
-5,953
80
Strength Scores
Strength Scores (a normalized measure of Speculator positions over a 3-Year range, from 0 to 100 where above 80 is extreme bullish and below 20 is extreme bearish) showed that the Bloomberg Commodity Index (68.0 percent) and Heating Oil (63.2 percent) lead the energy category this week and are the only two markets above their midpoint of the past three years (50 percent).
On the downside, WTI Crude Oil (7.7 percent) and Gasoline (19.1 percent) come in at the lowest strength levels currently and are in bearish extreme positions (below 20 percent). Natural Gas (31.8 percent) and Brent Crude Oil (47.6 percent) are the next lowest strength scores.
Strength Statistics: WTI Crude Oil (7.7 percent) vs WTI Crude Oil previous week (4.3 percent) Brent Crude Oil (47.6 percent) vs Brent Crude Oil previous week (45.7 percent) Natural Gas (31.8 percent) vs Natural Gas previous week (34.8 percent) Gasoline (19.1 percent) vs Gasoline previous week (17.6 percent) Heating Oil (63.2 percent) vs Heating Oil previous week (66.1 percent) Bloomberg Commodity Index (68.0 percent) vs Bloomberg Commodity Index previous week (67.6 percent)
Strength Trends
Strength Score Trends (or move index, calculates the 6-week changes in strength scores) show that the Bloomberg Commodity Index (8.9 percent) leads the past six weeks trends for energy this week. WTI Crude Oil (7.7 percent) and Gasoline (1.6 percent) fill out the other positive movers in the latest trends data.
Heating Oil (-15.3 percent) leads the downside trend scores currently while the next markets with lower trend scores were Natural Gas (-9.1 percent) followed by Brent Crude Oil (-6.2 percent).
Strength Trend Statistics: WTI Crude Oil (7.7 percent) vs WTI Crude Oil previous week (-7.0 percent) Brent Crude Oil (-6.2 percent) vs Brent Crude Oil previous week (-10.5 percent) Natural Gas (-9.1 percent) vs Natural Gas previous week (-6.2 percent) Gasoline (1.6 percent) vs Gasoline previous week (-5.2 percent) Heating Oil (-15.3 percent) vs Heating Oil previous week (-8.8 percent) Bloomberg Commodity Index (8.9 percent) vs Bloomberg Commodity Index previous week (8.4 percent)
Individual COT Market Charts:
WTI Crude Oil Futures:
The WTI Crude Oil Futures large speculator standing this week equaled a net position of 239,878 contracts in the data reported through Tuesday. This was a weekly increase of 12,821 contracts from the previous week which had a total of 227,057 net contracts.
This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 7.7 percent. The commercials are Bullish-Extreme with a score of 93.7 percent and the small traders (not shown in chart) are Bearish with a score of 36.2 percent.
WTI Crude Oil Futures Statistics
SPECULATORS
COMMERCIALS
SMALL TRADERS
– Percent of Open Interest Longs:
23.1
39.8
4.9
– Percent of Open Interest Shorts:
6.9
57.4
3.5
– Net Position:
239,878
-261,568
21,690
– Gross Longs:
342,588
589,445
73,243
– Gross Shorts:
102,710
851,013
51,553
– Long to Short Ratio:
3.3 to 1
0.7 to 1
1.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):
7.7
93.7
36.2
– Strength Index Reading (3 Year Range):
Bearish-Extreme
Bullish-Extreme
Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:
7.7
-6.3
-9.5
Brent Crude Oil Futures:
The Brent Crude Oil Futures large speculator standing this week equaled a net position of -37,903 contracts in the data reported through Tuesday. This was a weekly gain of 1,120 contracts from the previous week which had a total of -39,023 net contracts.
This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 47.6 percent. The commercials are Bullish with a score of 54.4 percent and the small traders (not shown in chart) are Bearish with a score of 25.1 percent.
Brent Crude Oil Futures Statistics
SPECULATORS
COMMERCIALS
SMALL TRADERS
– Percent of Open Interest Longs:
15.6
53.7
4.7
– Percent of Open Interest Shorts:
38.8
31.3
4.0
– Net Position:
-37,903
36,732
1,171
– Gross Longs:
25,663
88,006
7,706
– Gross Shorts:
63,566
51,274
6,535
– Long to Short Ratio:
0.4 to 1
1.7 to 1
1.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):
47.6
54.4
25.1
– Strength Index Reading (3 Year Range):
Bearish
Bullish
Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:
-6.2
7.2
-8.5
Natural Gas Futures:
The Natural Gas Futures large speculator standing this week equaled a net position of -155,711 contracts in the data reported through Tuesday. This was a weekly fall of -9,996 contracts from the previous week which had a total of -145,715 net contracts.
This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 31.8 percent. The commercials are Bullish with a score of 69.2 percent and the small traders (not shown in chart) are Bullish with a score of 61.6 percent.
Natural Gas Futures Statistics
SPECULATORS
COMMERCIALS
SMALL TRADERS
– Percent of Open Interest Longs:
15.9
43.5
6.9
– Percent of Open Interest Shorts:
32.2
30.8
3.3
– Net Position:
-155,711
121,308
34,403
– Gross Longs:
153,110
417,431
66,185
– Gross Shorts:
308,821
296,123
31,782
– Long to Short Ratio:
0.5 to 1
1.4 to 1
2.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):
31.8
69.2
61.6
– Strength Index Reading (3 Year Range):
Bearish
Bullish
Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:
-9.1
10.9
-10.1
Gasoline Blendstock Futures:
The Gasoline Blendstock Futures large speculator standing this week equaled a net position of 47,073 contracts in the data reported through Tuesday. This was a weekly advance of 1,481 contracts from the previous week which had a total of 45,592 net contracts.
This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 19.1 percent. The commercials are Bullish-Extreme with a score of 85.1 percent and the small traders (not shown in chart) are Bearish with a score of 20.2 percent.
Nasdaq Mini Futures Statistics
SPECULATORS
COMMERCIALS
SMALL TRADERS
– Percent of Open Interest Longs:
30.5
49.6
7.2
– Percent of Open Interest Shorts:
12.1
68.5
6.8
– Net Position:
47,073
-48,192
1,119
– Gross Longs:
77,904
126,887
18,448
– Gross Shorts:
30,831
175,079
17,329
– Long to Short Ratio:
2.5 to 1
0.7 to 1
1.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):
19.1
85.1
20.2
– Strength Index Reading (3 Year Range):
Bearish-Extreme
Bullish-Extreme
Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:
1.6
2.0
-24.2
#2 Heating Oil NY-Harbor Futures:
The #2 Heating Oil NY-Harbor Futures large speculator standing this week equaled a net position of 14,097 contracts in the data reported through Tuesday. This was a weekly fall of -1,967 contracts from the previous week which had a total of 16,064 net contracts.
This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 63.2 percent. The commercials are Bearish with a score of 43.6 percent and the small traders (not shown in chart) are Bearish with a score of 39.4 percent.
Heating Oil Futures Statistics
SPECULATORS
COMMERCIALS
SMALL TRADERS
– Percent of Open Interest Longs:
13.8
54.7
13.3
– Percent of Open Interest Shorts:
9.0
63.6
9.3
– Net Position:
14,097
-25,941
11,844
– Gross Longs:
40,428
160,165
39,038
– Gross Shorts:
26,331
186,106
27,194
– Long to Short Ratio:
1.5 to 1
0.9 to 1
1.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):
63.2
43.6
39.4
– Strength Index Reading (3 Year Range):
Bullish
Bearish
Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:
-15.3
11.2
-0.6
Bloomberg Commodity Index Futures:
The Bloomberg Commodity Index Futures large speculator standing this week equaled a net position of -10,317 contracts in the data reported through Tuesday. This was a weekly lift of 117 contracts from the previous week which had a total of -10,434 net contracts.
This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 68.0 percent. The commercials are Bearish with a score of 31.9 percent and the small traders (not shown in chart) are Bearish with a score of 20.7 percent.
Bloomberg Index Futures Statistics
SPECULATORS
COMMERCIALS
SMALL TRADERS
– Percent of Open Interest Longs:
25.2
70.0
0.5
– Percent of Open Interest Shorts:
40.3
55.3
0.1
– Net Position:
-10,317
10,031
286
– Gross Longs:
17,200
47,853
361
– Gross Shorts:
27,517
37,822
75
– Long to Short Ratio:
0.6 to 1
1.3 to 1
4.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):
68.0
31.9
20.7
– Strength Index Reading (3 Year Range):
Bullish
Bearish
Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:
8.9
-9.0
0.2
Article By InvestMacro – Receive our weekly COT Newsletter
*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.
The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.
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