Oil price bounce drives global commodity open interest value rebound – JPM

The estimated value of open interest across global commodity markets increased by 1% over the week to $15 billion, with gains driven entirely by the energy sector, JPM Commodities Research said, while it expects LME copper prices to trade around $9,800/mt in the coming quarter.

Net contract-based inflows returned to global commodity markets after consecutive weekly outflows of late, albeit totalling $833 million, JPM analysts said in a note dated June 17.

The estimated value of the net investor position aggregated across commodity markets declined for a consecutive week, with declines in the metals, agriculture and environment markets being partially offset by energy market gains as of June 11.

Net investor length in energy markets rebounded off recent lows, increasing by $3.3 billion week-on-week to $3.6 billion, the JPM report said.

The estimated value of open interest in precious metals markets declined slightly to ~$179 billion, falling for a fourth week in the week to June 14. Managed Money net length in COMEX Gold futures increased by 666 contracts to 152.9k contracts in the week ending 11 June.

The estimated value of open interest across base metals markets meanwhile declined for a fourth week to ~$198.9 billion. The brokerage, however, sees “emerging signs that Chinese demand is finally responding to a pullback in prices.” Expects China to begin to digest its built visible copper inventories more fully over the coming weeks and months, lending support to copper prices at a higher floor of around $9,800/mt in the coming quarter.

In the energy space, meanwhile, oil benchmarks ticked lower as investors assessed the demand situation and ongoing uncertainty around the U.S. central bank’s interest rate timeline.

Crude oil futures jumped to their best levels since late April on Monday, adding to last week’s gains that followed reports from OPEC+, the International Energy Agency and U.S. Energy Information Administration which boosted confidence that oil demand will improve in this year’s H2.

The Financial Times, meanwhile, reported that the Biden administration is ready to release more oil from the U.S. Strategic Petroleum Reserve to stop any jump in gasoline prices at the pump this summer.

Potentially relevant stocks: Flotek Industries (FTK), NGL Energy Partners LP (NGL), KLX Energy Services Holdings (KLXE), Cactus (WHD), Sunoco LP (SUN), Gulf Resources (GURE), Novagold Resources (NG), McEwen Mining (MUX).

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