COT Report: Speculators sell dollar, buy crude ahead of Middle East escalation
Ole Hansen, Head of Commodity Strategy, Saxo Bank
In the latest reporting week to 10 June, the US Dollar Index (DXY) extended its slide to a fresh three-year low, prompting a marked shift in speculative positioning. According to CFTC data, non-commercial traders increased their gross USD short positions against the eight major IMM currency futures by 31%, pushing the total to a four-week high of USD 16 billion.
As shown in the table below, the bulk of the dollar selling was channeled into demand for EUR, GBP, and CAD, and only partly offset by a sixth consecutive week of net JPY selling.
Broad commodity buying ahead of Middle East escalation
In the week to June 10, managed money accounts showed broad-based demand across commodities, with net buying recorded in all major sectors except softs. The most notable positioning shifts occurred in the energy space, as speculative appetite was buoyed by tightening fundamentals and early signs of improving risk sentiment following renewed optimism around a potential US-China trade deal, which helped ease macroeconomic and demand concerns.
The standout move came in crude oil, where speculators added aggressively to net long positions, driving the combined Brent and WTI long to a ten-week high of 319,000 contracts. This was primarily driven by a combination of fresh longs in Brent and the reduction of gross short positions in WTI, as the market entered the peak summer demand period amid signs of tightening supply.
Importantly, this shift in positioning occurred before last Friday's dramatic escalation in the Middle East, when Israel launched strikes on Iranian nuclear facilities and senior military targets, triggering a near-13% intraday spike. Crude settled 7% higher on Friday, only to spike again in early Monday trade as hostilities between Israel and Iran continued.
However, the absence of direct strikes on oil infrastructure or export facilities, combined with a failure to surpass Friday's price peaks—Brent at USD 78.50 and WTI at USD 77.60—invited profit-taking and hedging flows from producers. Still, the unfolding conflict presents a binary risk scenario: uninterrupted flows could trigger a sharp $10 correction, while any disruption to Iranian exports or a worst-case scenario blockade of the Strait of Hormuz could send prices soaring. For now, prices are drifting lower into Monday's session, with current levels only justified if actual supply disruption materialises.
In precious metals, gold saw modest long liquidation, while silver attracted fresh buying. The standout was platinum, where net long positions jumped alongside a 13% price surge—driven by technical momentum and an outlook pointing to tightening market condition.
In agriculture, soybeans found renewed support amid optimism around Chinese demand, while short covering helped reduce an extended net short in wheat. Corn, however, continued to face selling pressure amid a persistently bearish supply outlook. The softs sector was the only area to buck the trend, with sugar shorts doubling on weakening fundamentals and technical breakdowns. In contrast, the livestock sector remained in favour, with broad-based buying led by hogs as supply concerns and firm seasonal demand supported bullish sentiment.
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