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As fears that hurricane Gordon may impact offshore production eased, WTI crude oil traders were content to liquidate their longs, according to CFTC weekly report (W/E Sep. 11) and marginally add to their shorts with prices hovering near the top of the recent trading range, notes the research team at TD Securities.

Key Quotes

“That being said, an increasing body of evidence has pointed towards stricter compliance with US sanctions on Iran, suggesting that the market for crude could tighten more than anticipated.”

“Further, with little spare capacity remaining, growing unrest in Iraq, a fragile situation in Libya and a crumbling production profile in Venezuela could all provide the catalysts needed for crude prices to rally further.”

“Gold specs marginally increased positioning this week as conflicting information prompted both longs and shorts to lighten their exposure to the yellow metal. While money manager and CTA short positioning remains near record levels, suggesting a short covering rally could be in the cards, commercial positions are expressing a more bullish outlook for the yellow metal.”

“In fact, commercials’ net length remains long and is near its highest levels since 2001, which implies they see value at current prices. That being said, we suspect that any rally in gold will remain short-lived until the dollar weakens further.”

“Money managers continued to aggressively liquidate their net length in copper as speculators liquidated their longs but only marginally covered their shorts given the unpredictability associated with the recent stream of news-flow which continues to constrain convictions.”

“A brief relief rally ensued following a report that negotiations with China on trade had resumed, but Trump was quick to dismiss the claim, sending prices back toward the lows of the recent range. We suspect that any progress on the trade front will take time to materialize, which suggests that traders will continue to shun the red metal’s firm fundamentals for the moment.”

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