Commodities: Hedge funds, money managers trimmed net long crude positions

Three-month copper futures retreated 1.04% to $7,045 a ton on London Metal Exchange after hitting their highest level in a week at $7,188.50. Three-month zinc cheapened 1.55% to $3,502 a ton.

Report of substantial rise in base metal production in Peru, the world’s second biggest copper, zinc and silver producer, weighed on prices Monday. Peruvian copper production rose 2.9% to 2.4 million tons, as zinc production jumped 10.2% to 1.5m tons in 2017.

In the energy space, West Texas Intermediate futures slipped 1.07% to $64.62 a barrel, on news that US crude explorers added six drilling rigs across the country’s oil fields last week, the highest since August. The total number of US rigs exploring oil rose to 765.

Brent futures fell 1.02% to $67.69 a barrel.

“With the higher US oil rig counts and higher oil production sustaining into February, the [supply] concerns in the market seem to be valid at this point” said Barnabas Gan, economist at Oversea-Chinese Banking Corp. “As these worries resurface, prices are edging lower.”

Commodity Futures Trading Commission data showed that hedge funds and money manager trimmed their long positions on crude oil in the week to January 30. Net long positions in Brent declined 34% to 35,260 contracts, as net long WTI positions fell 0.03% to 495,975 contracts.

The spot gold traded 0.21% down to $1,330.61 an ounce.

Silver rebounded 0.78% to $16.73 on Monday, after dropping 4% on stronger US dollar on Friday.

Meanwhile, gold traded at its highest level since April 2016 against silver.

“Given silver is inexpensive versus gold, while industrial use is rising and mine output shrinking, there’s a strong argument to buy [silver] now” said Gregor Gregersen, founder of Singapore-based Silver Bullion Pte.

Net long positions in gold increased 1.3% to 35,260 contracts in the week to January 30, according to CFTC data. Net long positions in silver advanced 11.4% to 26,318 contracts.

Higher US yields increased the opportunity cost of holding non-interest-rate-bearing gold and silver, but didn’t dent investors’ appetite.

By Ipek Ozkardeskaya