The new month commenced with some light buying taking Oct’22 up to 17.64 before easing back to sit quietly in the lower 17.50’s. Friday evenings COT report showed a shift back to the short side with the specs/funds showing as -41,108 lots as at last Tuesday as a result of more than 80,000 net shorts being added over the week, and despite some movement away from the lows during the second half of last week it is likely that much of this net short remains. There was little interest in attaching to the wider macro movements last week and so it proved again this morning as weakness across the commodity sector was ignored to leave prices continuing to quietly drift either side of 17.50, recent movements potentially discouraging some participation from smaller traders who have been whipsawed. That picture changed as we moved though the afternoon as spec selling started to reappear and send the market lower to challenge last week’s 17.32 low, finding little support to prevent the slide on the way to this mark. More substantial scale buying was seen below 17.32 and despite some heavier spec selling the market only extended the move down to 17.20 before encountering some short covering/profit taking. As we saw last week there are few resting orders within the range and the covering quickly took Oct’22 back up to the 17.50’s where it had sat this morning, once again showing scant regard for the macro having ignored the positive overtures last week. Buying continued to the call which led the market to close positively at 17.60, a solid showing which most likely keeps the market playing the bottom end of the broad range for the time being with a bottom being built but question marks remaining over the sustainability of any significant rally.
Oct’22 started the new month negatively with the market quickly coming under pressure and slipping back to the lower $520’s over the first couple of hours. This corrective movement was not overly surprising given the significant gains made by the spot month last week, and while the decline was at a faster pace than the moderate losses showing for No.11, it still left the Oct’22 white premium valued above $135.00. Things quietened down through the middle part of the day with prices lifting away from the morning lows once the Americas joined the fray, however the recovery proved to be limited and pressure for No.11 and the macro soon drew in some spec selling of our own. This sent Oct down to a session low at $517.00 before some short covering emerged to pull away from the lows as we entered the final hour. Spread movements were weaker as here also some recent gains were given back with Oct/Dec’22 back down to $27.00, however volumes were low, and these losses were recovered as the spot month rallied against short covering ahead of the close. Oct’22 settlement at £523.90 was far more positive than would have been anticipated a short while earlier and keeps the market comfortably away from the lows as it continues to establish a bottom from which to try and rebuild.
